When recruiting a first employee, the wage cost is an essential piece of information to know. It is not always easy to take all the data into account when calculating this cost and its impact on your company's budget.
What are the wage costs
The wage costs are what a worker actually costs the company. It comprises the gross salary, which includes the net salary as well as all the compulsory deductions (social security contributions, employers' contributions and retention tax) and other legal obligations (insurance, etc.).
How to calculate the wage costs?
Before taking on your first employee, it is essential to know how much this will cost you. To get a fairly precise idea, the net salary he or she will receive will correspond to the gross salary paid by the company, after deduction of the:
1. Compulsory contributions
The company is responsible for these deductions and payments to the NSSO. These are social security contributions. The contributions payable by the worker are 13.07% of gross pay. The employer's contribution amounts to 25% of the gross amount.
2. Retention tax
This is also deducted by the employer. It is based on scales calculated according to the worker's salary and family situation (single, married, with or without children).
3. Legal obligations
The cost of insurance, accident prevention at work, social secretariat, etc. still need to be added.
For example, Securex's gross/net calculator shows that a single employee will earn a net salary of € 2,054.97 per month for a gross salary subject to social security of € 3,150.
To go even further in the calculation of wage costs, Securex has also developed an intelligent calculator that, by entering some information about your staff, enables you to obtain a cost estimate, as well as an estimate of the savings you can make thanks to the tax shift measures. This is very useful before signing up your first recruit.
What do the wage costs depend on?
Wage costs vary according to serval parameters:
- The status of the employee (salaried of self-employed)
- Age and experience
- Function or hierarchical level
- The business sector
- The number of hours worked (full-time or part-time)
How to optimise wage costs?
There are solutions to reduce wage costs without reducing the net salary - and even to allow it to be increased.
For example, recruitment allowances or reductions in social security contributions enable to significantly reduce the level of gross pay payable by the employer. These systems are either regional or federal; your social secretariat will help you to find your way around these mechanisms and benefit from them.
These do not provide additional remuneration in the strict sense of the term but are benefits that will boost the employee’s purchasing power. The main fringe benefits are: meal vouchers, group insurance, hospital insurance, company cars, mobile phone subscriptions, etc.
If you need help and advice when recruiting your first employee, the Securex Social Secretariat is ready to guide and assist you throughout the process.