Is gross salary the same as the cost of employment?

No. Gross salary is what you have agreed to pay the employee before tax. The cost of employment is the total you spend as an employer, including your own statutory contributions and any benefits. That figure is always higher than gross salary, often by 20 to 45 per cent depending on the country.

What statutory contributions do employers typically pay?

The most common are social security or national insurance, pension or provident fund contributions, unemployment insurance, and in some countries payroll tax. The rates and names differ by country, but the principle is the same: the state requires you to contribute toward employee welfare.

Do voluntary benefits count as part of the cost of employment?

Yes. Private health cover, life insurance, a company phone, and other perks you offer on top of the legal minimum all add to what you spend per head. They also affect your total employer-cost calculation when you are deciding whether a hire is affordable.

How do I estimate the cost of employment in a country I have never hired in before?

Start with the gross salary, then look up the statutory employer contribution rates for that country. Add any legally required benefits such as 13th-month pay or mandatory health cover. Finally, factor in payroll admin or any platform fee. An employer cost calculator can model this for you quickly.

Glossary

Cost of employment

The total amount an employer pays to employ one person: gross salary plus statutory contributions, mandatory and voluntary benefits, and any associated admin costs.

Reviewed by Teamed's in-house employment-law team·Last updated 24 June 2026

What is Cost of employment?

The cost of employment is everything you actually spend to employ someone beyond their take-home pay. It starts with gross salary, then adds the statutory contributions your country requires you to make as an employer, such as social security, pension, and payroll tax. On top of that sit benefits you provide, whether legally required (such as paid leave and sick pay) or discretionary (such as private health cover or a company phone). Finally, there are the admin costs tied to running payroll and staying compliant in each country where you have staff. Together these layers mean the real cost of a hire is almost always higher than the headline salary figure you agreed in the offer letter. Understanding this full picture before you hire in a new country helps you budget accurately, price contracts correctly, and avoid surprises when the first payroll invoice lands.

What goes into the cost of employment?

Four layers make up the total: gross salary, employer statutory contributions (social security, pension, payroll tax), benefits (both legally required and voluntary), and the admin cost of running compliant payroll. Each country has different rates and rules, so the mix varies.

How does the cost of employment differ by country?

Statutory contribution rates vary widely. In the UK, employers pay 15% National Insurance on earnings above a threshold. In France, combined employer charges can exceed 40% of gross salary. In Singapore, the employer Central Provident Fund rate is 17%. Always check local rules before budgeting.

Why does knowing the full cost matter before you hire?

Quoting a salary in an offer letter is only part of the commitment. If you have not factored in employer contributions and benefits, you can underestimate headcount spend by 20 to 40 per cent or more. Getting this right early keeps your finance team on side and your margins intact.

How can using a global employment platform affect the cost?

When you employ someone through a global employment platform, the platform handles local compliance, payroll filing, and benefit administration. You pay one consolidated invoice that covers salary, contributions, and a platform fee, making the total cost of employment transparent before you commit.

Key facts

UK employer National Insurance rate (2025/26 and 2026/27): 15% on earnings above £5,000 per yearIncreased from 13.8% on 6 April 2025. The secondary threshold was also reduced from £9,100 to £5,000 per year, widening the earnings base on which the charge applies.Source: GOV.UK: Rates and thresholds for employers 2025 to 2026· verified 2026-06-24

Frequently asked questions

Is gross salary the same as the cost of employment?
No. Gross salary is what you have agreed to pay the employee before tax. The cost of employment is the total you spend as an employer, including your own statutory contributions and any benefits. That figure is always higher than gross salary, often by 20 to 45 per cent depending on the country.
What statutory contributions do employers typically pay?
The most common are social security or national insurance, pension or provident fund contributions, unemployment insurance, and in some countries payroll tax. The rates and names differ by country, but the principle is the same: the state requires you to contribute toward employee welfare.
Do voluntary benefits count as part of the cost of employment?
Yes. Private health cover, life insurance, a company phone, and other perks you offer on top of the legal minimum all add to what you spend per head. They also affect your total employer-cost calculation when you are deciding whether a hire is affordable.
How do I estimate the cost of employment in a country I have never hired in before?
Start with the gross salary, then look up the statutory employer contribution rates for that country. Add any legally required benefits such as 13th-month pay or mandatory health cover. Finally, factor in payroll admin or any platform fee. An employer cost calculator can model this for you quickly.

Related terms

Note

This is general information, not legal advice. Statutory rules vary by country and change over time.

Glossary

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Last verified 2026-06-24