Cost of hiring an employee

How to calculate the cost of an employee

The cost of an employee for the employer is not limited to the net salary the employee receives. You have to start from the gross salary, then add the employer contributions to obtain the total employer cost. In practice, an employee costs about 1.4 times their gross salary.

Employer vs employee contributions

Not all social contributions are borne by the same person. Two blocks must be distinguished:

• •Employee contributions (~22% of gross) are withheld from the employee's payslip. They explain the gap between gross and net salary. Net therefore represents about 78% of gross.
• •Employer contributions (~40 to 42% of gross) are paid on top by the employer. They do not reduce the employee's salary but increase the company's cost.

These contributions fund pensions (basic and AGIRC-ARRCO supplementary), health insurance, unemployment insurance, family benefits, workplace accident cover and various levies. On low salaries, the general reduction in contributions (formerly the Fillon scheme) sharply lowers the employer's share, bringing the net rate down to around 22% at the minimum-wage (SMIC) level.

How to reduce the cost of an employee

Several schemes make it possible to legally reduce the cost of a hire:

• •The general reduction on pay close to the minimum wage (SMIC) sharply lowers employer contributions.
• •Apprenticeships and subsidised contracts qualify for exemptions and hiring incentives.
• •Exempted zones (urban enterprise zones, rural revitalisation zones) reduce employer contributions under certain conditions.
• •Lightly or non-charged schemes (profit-sharing, employee participation, meal vouchers, the value-sharing bonus) improve purchasing power without inflating contributions.

Frequently asked questions