Tuesday, 6 July 2010

Top 10 Hidden Secrets associated with Employment Costs

10 Hidden Secrets Associated with Employment Costs

At first glance you might think employment has got to be cheaper than using an outsourced business to perform the same task, after all, the agreed hourly rate of your employee is only £10 per hour, right? Take another look.

Lets use the example of a PA you’ve decided to employ on a full time basis at a basic rate of £10 per hour. You might think you’ve saved yourself a bundle by not outsourcing to a professional VA at their seemingly ‘high’ rate of £25 per hour, but have a closer look.

Assume the total hours for your employee is 2080 hours per year, based on a 40 hour per week workload, so below we have calculated 10 hidden costs associated with employment.

10 Hidden Costs Associated with Employment – The Employer pays for:

1. Reviewing CV’s, interviewing and follow-up

2. Preparing a contract & employment paperwork

3. Legal fees associated with employment

4. Time for induction and training

5. Purchase/maintenance of workspace & facilities

6. Office supplies, furniture, equipment, etc.

7. NIC, SSP, Pensions, Holiday Pay, Annual wages

8. Payroll administration fees

9. Downtime, absenteeism, smoke & coffee breaks

10. Holiday, sickness, maternity/paternity leave

  • An employee's (e.g. a PA) base rate maybe £10 per hour, but by the time you add benefits, overhead and downtime (including holidays, sick time, etc), that rate jumps up to £21.50 per hour. Therefore your total annual costs based on 2080 hours per year works out to about £44,720 per annum. On the other hand, an outsourced PA (or VA) can typically crunch an employee’s 8 hr day into 4 hours, as you just pay for the time used. Also, a VA actively helps you reach your business goals. Note the employee's time is greater as you pay for downtime including: equipment failure, coffee & smoke breaks, water cooler chats and un-authorized computer use. So the annual rate for a VA works out to about £26,000, making a savings of £18,720.

Its now easy to see that utilising the services of an outsourced company is more cost effective and time efficient than employment. For further help with working smartly and moving your business to the next level, get in touch with us at Beck & Call UK on 0845 0040188 or post@beckandcalluk.co.uk, or visit our website.

© Some information derived from : Lisa Taliga of www.virtualpabusiness.com & Belinda Newton of the HR Dept www.hrdept.co.uk

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