The real cost of hiring an employee in the UK, with the arithmetic

7 minute read · Updated 2026-08-28

Before you spend a pound on advertising, it is worth setting out the real cost of hiring an employee in the UK, because the advertising line is almost always the smallest number involved. Every vacancy carries three separate costs: what you pay to attract candidates, what you pay a third party to find them, and what the empty seat costs you every week it stays empty. Below is the arithmetic, laid out so you can run it on your own roles rather than take anyone's word for it.

The cost of hiring an employee is more than the salary

Start with what the person costs once they are in post, because it sets the scale of everything else. On top of gross pay you will normally pay employer National Insurance on earnings above the secondary threshold, a minimum employer pension contribution of three per cent of qualifying earnings under auto enrolment, and the cost of 5.6 weeks of statutory holiday, which is paid time you get no output from. Then add induction, uniform or PPE, tools, a phone or a laptop, and any checks the role needs, such as an enhanced DBS, a funded CSCS card or a Driver CPC module.

The practical rule is that a £30,000 salary is not a £30,000 cost. Work your own multiplier out once from last year's payroll and reuse it. It stops you looking at a recruitment fee in isolation and calling it small.

Advertising: a fixed cost you know in advance

Advertising has one useful property. The price does not move with the salary, so the same advert costs the same whether the role pays £24,000 or £64,000. The more senior the vacancy, the better advertising looks next to a percentage fee.

On HIRING UK an advert runs for 30 days, applications arrive straight in your inbox and on your dashboard with the CV attached, and there is no placement fee, no contract and no minimum term. If an advert gets no applications at all, we will rewrite it and run it again free for another 30 days. Current prices are published on the pricing page and are at a launch rate while the board builds its audience.

Agency fees: do the multiplication before you sign

A permanent recruitment agency normally charges a percentage of the first year salary. The sums are simple and worth writing down:

• Fifteen per cent of a £30,000 salary is £4,500.
• Eighteen per cent of a £45,000 salary is £8,100.
• Twenty per cent of a £60,000 salary is £12,000, and VAT at twenty per cent takes that to £14,400.

None of that is a criticism of agencies, which earn their fee on genuinely difficult, confidential or specialist searches. These are simply the figures to hold in your head when you compare routes. Fee models, rebate periods and temp to perm charges are covered in detail in our guide to recruitment agency fees.

What an unfilled vacancy costs every week

This is the number most employers never calculate, and it is usually the largest of the three. There are two ways to price it and you only need one.

Cover cost. If the work still has to be done, somebody is doing it. Say the role pays £13.50 an hour and the hours are covered by overtime at time and a half. That is £20.25 an hour, so a 37.5 hour week costs £759 in overtime before employer National Insurance. Six weeks of that is more than £4,500, which is the same order as a mid range agency fee, and at the end of it you have nobody permanent and a tired team.

Lost output. Where the role produces revenue directly, price the gap instead. Take the annual revenue or margin the position is expected to support, divide by the number of working weeks in your year, and multiply by the weeks the seat is empty. If you cannot put a figure on it, use the softer version and write down which orders, calls, site visits or jobs are not happening this month because the post is vacant.

Put the three routes side by side

For a single £30,000 role the comparison usually looks like this. Advertising is a fixed, published cost paid once. An agency fee at fifteen per cent is £4,500 plus VAT, normally payable when the person starts, with a rebate that tapers away over the first few weeks. Leaving the vacancy open costs your cover figure or your lost output figure, every week, until it is filled.

The conclusion for most small employers is not that agencies are wrong, it is about sequence. Advertise first, because it is the cheapest route and because it tells you something useful. If a clear, properly paid advert produces no response, you have a pay or market problem, and an agency will charge you a percentage of a salary to discover the same thing. If the advert works, you have filled the role for a fixed fee. If it does not, you have lost days rather than thousands of pounds, and you can escalate with better information than you had on day one.

One more cost belongs in the calculation: the bad hire. Recruiting in a panic means notice pay, another advert, another induction and the disruption in between. Speed matters, but not at the price of a structured interview and proper right to work checks.

Next step: run the three numbers for the vacancy on your desk today, then post the job and see what the fixed cost route produces before you commit to a percentage. If you would like a second opinion on the salary or the wording first, the employers page explains how that works.