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The Real Cost of Hiring Your First Employee

Salary is roughly two-thirds of the true cost. Here is the full picture so your first hire does not break the budget.

28 June 2026 7 min read

Beyond salary

Employer National Insurance, pension contributions, holiday cover, equipment, insurance and training add substantially to the headline wage. Budget the full loaded cost before advertising.

Legal obligations from day one

These are not optional and carry penalties if missed.

  • Employer's liability insurance
  • PAYE registration and RTI submissions
  • Written statement of particulars on or before day one
  • Auto-enrolment pension assessment
  • Right to work checks with records kept

Fund it from overheads first

Many businesses find that a serious overheads review funds a meaningful share of a first salary. Cutting a fixed cost is certain; the extra revenue a new hire brings is a forecast.

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