Personnel costs
Workers are a valuable investment, but they also bring a range of associated costs. Beyond the more straightforward expenses, such as salary or hourly rates, it's essential for business owners or managers to factor in a variety of additional costs. Whether you employ permanent staff or flexible freelancers, it’s important to understand the full scope of the costs involved.
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Additional employment costs: An overview of all worker expenses
Additional employment costs often represent a substantial portion of the cost of a worker overall, so it’s important to understand them fully. These include training costs, travel allowances, and sick pay. Below, we provide an overview of these costs, explain how to calculate them, and share tips on reducing them by integrating a flexible staffing strategy.
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What are the costs of personnel? Direct vs indirect costs
Direct personnel costs include all the expenses a business incurs for the complete staffing needs of both permanent and flexible workers.
or permanent employees, these costs comprise the gross salary, mandatory employer contributions such as social premiums and pension contributions, as well as holiday pay. Indirect personnel costs are less immediately visible, but they include expenses like recruitment, training, and secondary benefits. You also need to take into account hidden costs, such as absenteeism and severance costs.
In some cases, hiring a permanent employee may not be possible or desirable. For instance, when you're dealing with a temporary surge in workload, need specialised expertise, or simply want to maintain financial flexibility. In such situations, a freelancer can be the ideal solution: you can scale up without being tied to the fixed costs associated with full-time employees. But what does it actually cost to hire a freelancer?
Read more about the costs of hiring a freelancer
What does it cost to hire permanent staff?
The cost of hiring permanent employees includes the gross salary and mandatory employer contributions such as social premiums and pension contributions. On top of this, there are indirect costs like recruitment, training, and absenteeism. In general, the total cost is 20-40% higher than the gross salary. If you add flexible staff to the mix, and use a combination of permanent employees and freelance workers in your staffing plan, for freelancers, you only need to account for the hourly rate + platform fee if you hire them via Temper.
Read more about the costs of hiring permanent staff here.
Indirect personnel costs: key insights
Personnel costs extend beyond just gross salary and employer contributions. In addition to costs like recruitment and secondary benefits, hidden expenses like absenteeism and severance payments can quickly add up. It’s crucial to streamline your processes and critically assess your workforce strategy to minimise unnecessary spending. Flexible staffing models, such as using freelancers, can offer you greater agility and cost-saving opportunities.
Read more about Temper and our services here.
