What does an employee cost?
It can be useful to have an overview of the costs that are attributable to having an employee.
What does an employee cost - for example
In this example, we take an employee who earns a gross annual salary of NOK 500,000. We have assumed that it has been agreed that the employee will be entitled to five weeks' holiday.
|Annual salary||451,923||The salary payable for five weeks’ holiday is deducted in the calculation|
|Holiday pay 12%||54,231||10.2% or 12%, depending whether the holiday is in accordance with the minimum requirements of the Annual Holidays Act or whether five weeks’ holiday have been agreed. For employees over the age of 60, the corresponding rates are 12.5% and 14.3% respectively.|
|Employer's National Insurance contributions 14.1%||71,368||Varies from 0% (Parts of Troms and Finnmark counties) to 14.1%. Employer’s National Insurance contributions must be calculated on both salary and holiday pay. If salary and other work remuneration exceeds NOK 750,000, an extra 5 % employers' national contributions should be paid on the exceeding amount.|
|Pension costs (OTP, defined-contribution scheme, 2%)||10,000||The example uses a defined-contribution scheme, where the minimum requirement is 2% of the salary (annual salary) up to 12 G. (Basis for calculation: annual salary - 500,000)|
|Employer’s National Insurance contributions on the pension costs, 14.1%||1,410||Concerns pension|
|Occupational injury insurance||3,000||Price can vary considerably with the injury risk applicable in the sector concerned|
Enter your own numbers in our salary calculator, and see what the costs are.
Welfare costs are not included in the calculation. Examples of welfare costs include courses, accident insurance, subsidised canteen, gifts to employees, Christmas meals or other social gatherings.
In addition, consideration should be given to whether or not costs linked to absence due to illness should be included in the budget. Businesses which need to take on cover staff in the event of absence due to illness should in any case include such costs in their budget. The costs linked to having employees will vary depending on actual absence due to illness and the benefits/conditions that have been agreed with the employees. A rule of thumb could be to determine the expected total cost by adding 20 - 30 percent to the employee's gross annual salary.