Pricing the real cost before the offer goes out

Yanis runs a joinery workshop and wants to hire a craftsman at 2 200 € gross a month. He budgets 26 400 € for the year. His accountant comes back with 37 500 €. The 11 100 € gap is nothing unusual: employer contributions never appear on a job advert and are rarely priced in advance. This module costs each line before any promise is made.

One job, three different figures

Most first-time employers price a hire from the wrong number. Gross pay is the figure written into the contract. Net pay is what the employee receives once employee contributions come off. Employer cost adds employer contributions on top of gross: it is the only figure your cash position cares about.

Between net received and cost borne, the ratio often passes 1,8. Budgeting from the net a candidate asks for therefore understates real spending by nearly half, and the gap surfaces at the first collection notice. The candidate negotiates in net, the contract records gross, and the bank account feels employer cost.

Those 42 % and 22 % are input assumptions, not statutory rates. The real employer rate depends on headcount, on the industry agreement and on low-pay relief; every field can be replaced in the calculator once you know your own situation.

Contributions are computed in bands

Several contributions apply not to the whole salary but to bands delimited by the social security ceiling. Below the ceiling sits band one; above it, band two, carrying different rates.

Yanis's 2 200 € stays entirely below the ceiling, so everything computes in band one. A manager on 5 000 € would see part of the package tip into band two, at a markedly higher rate. The bands also decide what a senior hire absorbs compared with two junior ones on the same total gross.

That tipping point explains why a raise costs proportionally more above the ceiling. Pricing it before the conversation avoids discovering the threshold effect once the increase has already been announced — and the same reading applies to a promotion or a bonus.

Low-pay relief changes the arithmetic

A general relief scheme cuts employer contributions sharply around the minimum wage, then tapers off as pay rises. It makes real cost markedly lower than a flat percentage applied mechanically to gross. Ignoring it overstates the cost of any role close to the minimum wage.

The practical consequence is that the average employer rate is not linear. Two roles paid 1 900 € and 3 200 € do not carry the same proportion of contributions, and the cost gap is narrower than the salary gap.

• Headcount: some contributions only apply above staffing thresholds.
• Industry-wide agreement: sector contributions and specific income protection cover.
• Pay level: general relief decreases as remuneration rises.
• Contract type: apprenticeships and subsidised contracts follow separate rules.
• Company health cover: employer participation is mandatory and belongs in the offer.

Price those five variables before you name a salary. Once the offer is out, room to manoeuvre disappears: gross pay renegotiates badly, and the gap is paid out of cash flow for the life of the contract.

One cost never reaches the payslip: time. The first weeks pull the owner into training, correcting and organising. Nothing records it, yet it weighs on workshop output for a month or two. Build the whole figure once, then revisit it at each recruitment: one costed page you can defend to a bank, a partner or an accountant.