Whether full-time, part-time, or independent contractors, hiring employees in the UK is always costly. This is not only because of having to pay for workers’ salaries and benefits. There are also other recruitment expenses to consider that result in a high total budget requirement.
As of 2021, the estimate for the annual income for full-time employees in the UK is 31 thousand pounds. However, the estimated cost of hiring a new employee is closer to 53-60 thousand pounds.
Below we break down the costs contributing to that number, we will look at the differences between hiring different types of workers. By considering your options you can hire faster, more efficiently, and with reduced overall costs.
The Costs of Hiring Employees in the UK
Labor costs in the UK increase significantly each year. While the exact figure varies, as of April 2022 the minimum wage for employees 23 and over is 9.50 pounds per hour.
Employers must expect to pay 13.8% of their employee’s salary towards NIC (National Insurance Contributions). Furthermore, there must be another 3% towards employer pension as part of organizing local payroll. Other costs include paid vacation days. Employees in the UK receive a minimum of 28 days–paid leave per year.
Yet there are still more expenses to consider when looking at the recruitment and hiring process. Employers must start spending money before potential candidates are even selected. You will need to pay for job board posting on sites such as LinkedIn, and time spent processing applicants yourself. If you choose to hire with a traditional recruitment agency, you will need to pay 20-30% of a new hire’s salary on top.
Once you have chosen suitable candidates, you might need to pay for background checks, assessment tests, and marketing. Depending on your company and industry, you may also have expenses related to training.
Finally, new employees will need appropriate workspaces and equipment such as a laptop, etc.
Hiring Independent Contractors in the UK
Hiring an independent contractor to work in the UK can help you reduce some recruitment costs. Independent contractors cover their own insurance and pension fees, and you are not required to give them any paid leave. They also use their own equipment and workspace to complete their tasks.
The potential drawbacks of hiring independent contractors center around the lack of consistency and exclusive rights. Contractor hourly rates are likely to be higher, and Independent Contractors tend to move from project to project. While an excellent choice to provide short-term skills or expertise, they may not be suitable for your needs long-term.
You can consider converting independent contractors into employees if they fit your company. However, you must do this carefully so that this ensures compliance. Our article on this subject can walk you through the steps of turning an independent contractor into a full-time employee.
How a Global Employer of Record Can Help You in the UK
A global Employer of Record (EOR), like a Professional Employer Organization (PEO) is a form of Global Employment Outsourcing (GEO). This local legal employer allows you to hire or transfer workers in a foreign country without a local entity in that country. An EOR hires your workers in the UK on your behalf and provides the HR functions they need to operate safely. This includes payroll processes, benefits and tax management, and employment contracts compliance.
These HR outsourcing services allow you to benefit from hiring internationally without building all of the necessary HR or legal structures.
Hiring in the UK with INS Global
Whether you’re looking for employees or independent contractors, INS Global can provide all the help you need to succeed. Our team of professional advisors are equipped to handle every step of the process of hiring in the UK. We offer constant guidance from the selection and screening process to contract formation and onboarding.
More than a simple online search, our Recruitment Process Outsourcing (RPO) service takes care of the entire recruitment process for you. More than a traditional recruitment agency, we save you more on time and overheads related to the searching and onboarding processes.
INS Global can provide PEO or global employer of record services to enable hiring overseas employees in the UK simply and safely. Our legal experts will ensure that all the paperwork and payroll are legally compliant and suit your specific situation.
Our INS Global expansion advisors are ready to discuss your needs and make a plan to aid your expansion or operation in the UK.
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