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15th June 2023

The cost of hiring new employees (+ how payroll can help)

Hiring new staff can be really expensive, especially as you want to get the right candidate for the job.

When taking on new employees, you can run into various expenses like:

●       Salary -  an average of £32,760 in the UK

●       Recruitment costs - roughly £6,552 per employee

●       National Insurance - an average of £3,265.08 per year

●       Training - estimated to be at £1,530 per employee

●       Pension contributions - £795.60 a year per employee

●       Employers liability insurance - £44.8 (lowest estimate)

All of the costs listed above are based on the average cost of employing a full time office worker in the UK and will help give you an idea of how much it can cost to hire new employees.

This blog will explore how much hiring a new employee could cost you and how payroll and HR solutions can help you manage this. So what’s involved in hiring someone new?


Human Resources

Human Resources are a huge part of the hiring process as they usually write job descriptions, look for and interview potential employees and manage legal contracts for staff. 

This highlights the importance of utilising HR personnel to help with some of your employment processes, however this can be expensive as you’ll need to pay their salaries, which is roughly £42,686 based on the national average salary of a HR Managers.

Here at Payescape our HR software HREscape can help you manage tasks like recruitment and onboarding making it easier for you to complete tasks, while making it more cost effective as you’ll be able to manage various hiring processes within our system.



Many companies use recruiters to help them hire the right candidates and they’re especially prominent within smaller businesses that don’t perhaps have a HR team or need some extra support within the recruitment process.

However, hiring recruiters can be quite expensive and increase the cost of hiring someone significantly. For example, recruitment agencies usually charge around £3,000 per new employee hired based on a 20-30% fee on the average salary of the employee. You may also want to consider the type of recruiter you choose as some recruiting companies charge a yearly fee and others work on a flat rate charge.


Job adverts

When it comes to job adverts it’s important that they’re written really well as that’s what will attract the right qualified candidates. It may be worth hiring a professional writer to help you tailor your job role in a way that will attract the best candidates possible.

This will obviously add costs to the hiring process and will add further expenses when it comes to posting your role on a job board. Some platforms have free job posting options, however it depends on the types of services and features you need to get the most out of your job and help you reduce finances in the long run.


Background checks

When it comes to background checks these can add extra costs when hiring new employees. These costs can include:

●       Hiring a company to complete your background checks

●       DBS checks


Training and onboarding

Training and onboarding new staff members can be expensive as you may need to send employees on training courses, hire a training specialist or pay for online courses.

According to 2020 government figures, employers spend £42 billion annually on training, with this averaging at £1,530 per employee. This seems like a high number, but remember not all training courses or sessions cost this much and you may not need to train all your employees within the same year, meaning you might spend less than the expense listed above.

If you’re concerned about how much you will need to spend on training, it may be worth putting a budget together. When doing this you could ask yourself questions like:

●       What information does each individual employee need to know to succeed within their role?

●       How can they most effectively learn and build those skills?

●       What are the price options for the type of training you need?


Salary and other costs

One of the biggest and most obvious costs is needing to pay employees salaries, which will be a minimum of £10.18 an hour for those over the age of 21. However, it ultimately depends on the salary you choose to pay your staff.


How can payroll software help you manage the costs of hiring an employee?

Investing in payroll software can help you manage the expenses and tasks associated with hiring new employees. That’s why here at Payescape our payroll software ensures you stay compliant with the latest rules and regulations and can easily manage your payroll tasks and data. 

Our software also has the ability to be integrated with our time and attendance and HR software helping you keep everything in one place and effectively keep on top of everything you need to know.

To discover how we can help you manage the costs and processes associated with hiring new staff get in touch with us today.

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