Staff Cost CalculatorFor Electrical Employers

When an electrical business owner considers hiring, the first question is usually "what salary do I need to offer?" But salary is only part of the cost. Employer National Insurance, pension contributions, holiday pay, sick pay, training, equipment, and management time all add to the total cost of employment — and failing to account for these hidden costs is one of the most common reasons small electrical businesses run into financial difficulty after hiring.

The rule of thumb in the construction industry is that the true cost of an employee is 1.3 to 1.5 times their gross salary. An electrician on £35,000 salary actually costs the business £45,500 to £52,500 per year. If you have not budgeted for this, your profit margin disappears and you end up working harder for less money than before you hired.

Elec-Mate's Staff Cost Calculator captures every component of employment cost and presents the full picture. It calculates the total annual cost, the cost per billable hour (accounting for holidays, training, and non-productive time), and the minimum revenue the employee needs to generate to justify their cost. This data feeds into your pricing strategy to ensure every job is priced to cover the true cost of your team.

Employer NI is the single largest hidden cost of employment. For 2025/26, employers pay 13.8% NI on earnings above the secondary threshold of £9,100 per year. This is in addition to the employee's own NI, which is deducted from their pay.

On a £30,000 salary: Employer NI = 13.8% x (£30,000 - £9,100) = 13.8% x £20,900 = £2,884.20 per year.

On a £35,000 salary: Employer NI = 13.8% x (£35,000 - £9,100) = 13.8% x £25,900 = £3,574.20 per year.

On a £40,000 salary: Employer NI = 13.8% x (£40,000 - £9,100) = 13.8% x £30,900 = £4,264.20 per year.

Employment Allowance: Small businesses may be eligible for the Employment Allowance, which reduces your employer NI bill by up to £5,000 per year. Most sole traders taking on their first employee will qualify, effectively eliminating employer NI for a single employee on a salary up to approximately £45,000. This is a significant saving — check eligibility with your accountant.

If your employees work under CIS as subcontractors, you do not pay employer NI on their earnings, but you also lose the benefits of direct employment (control over schedule, exclusivity, training investment). The tax guide explains the difference between employment and self-employment status.

All UK employers must automatically enrol eligible employees into a workplace pension scheme and make minimum contributions. This is a legal requirement, not an option. Eligible employees are those aged 22 to state pension age, earning above £10,000 per year, and working in the UK.

Minimum contributions: The current minimum total contribution is 8% of qualifying earnings, of which the employer must pay at least 3%. Qualifying earnings are those between £6,240 and £50,270 (2025/26). On a salary of £35,000, qualifying earnings are £28,760, so the minimum employer contribution is 3% x £28,760 = £862.80 per year.

In practice: Many employers contribute more than the minimum to attract and retain good staff. Offering 5% employer contribution on a £35,000 salary costs £1,438 per year but can make a significant difference in recruiting experienced electricians in a competitive market.

Administration: You need to choose a pension provider, set up the scheme, communicate with employees, process monthly contributions, and handle opt-outs and re-enrolment. The Pensions Regulator provides free tools for small employers, and most payroll software handles the calculation and submission automatically.

Pension contributions are an allowable business expense and reduce your corporation tax bill (if you are a limited company) or your self-assessment bill (if you employ staff as a sole trader).

Full-time employees are entitled to a minimum of 28 days paid holiday per year (including bank holidays). For an electrician on £35,000 salary, 28 days of paid holiday costs: £35,000 / 260 working days x 28 = £3,769.23. This is not an additional cost on top of salary (the employee is already paid), but it is 28 days of zero productivity. You are paying for 260 days but getting only 232 productive days.

The productivity impact: If your employee generates £300 per day in billable revenue, 28 days of holiday represents £8,400 in lost billing opportunity. This must be factored into your job pricing and revenue targets. Effectively, each productive day needs to generate enough revenue to cover the cost of 1.12 days (232 productive days covering 260 paid days).

Statutory Sick Pay (SSP): You must pay SSP to eligible employees from the fourth consecutive day of sickness. The current rate is £116.75 per week (2025/26) for up to 28 weeks. Budget 5 to 8 sick days per year per employee. Beyond SSP, you lose the employee's productivity and may need to reorganise other jobs or hire temporary cover.

Other statutory obligations: Maternity pay, paternity pay, and shared parental pay are additional obligations. While less common in small electrical businesses, they must be budgeted for. Most of the statutory pay is reclaimable from HMRC, but the administrative burden and productivity loss remain.

The capacity planning calculator accounts for holiday and sick leave when calculating your team's available billable hours.

Investing in your employees' training is both a cost and an investment. A well-trained electrician works more efficiently, produces better quality work, makes fewer costly mistakes, and can handle a wider range of jobs. But training has both direct costs and opportunity costs.

Direct training costs: BS 7671 amendment update courses (£150 to £300 each), specialist qualifications (EV charger installation, solar PV, fire alarm — £300 to £800 each), health and safety refresher courses (£100 to £250), and first aid training (£100 to £200). Budget £500 to £1,500 per employee per year for training, depending on the scope of work and qualifications needed.

Opportunity cost: Training days are non-billable. A 2-day course means 2 days of lost revenue (£600 to £800) plus the course fee. This doubles the effective cost of training, but the long-term benefit in capability and compliance justifies it.

Tools and equipment: Each employee needs their own toolkit — hand tools, power tools, test equipment, and PPE. A basic electrician's toolkit costs £2,000 to £4,000 to set up, with annual maintenance and replacement costs of £500 to £1,000. Test equipment calibration adds another £200 to £400 per year.

Apprenticeship Levy: If your annual payroll bill exceeds £3 million, you pay the Apprenticeship Levy at 0.5% of your total payroll. For most small electrical businesses, this does not apply, but if you are growing and adding employees, be aware of the threshold. Use Elec-Mate's apprenticeship employer guide for full details on funding and levy requirements.

Employing an apprentice is often the most cost-effective way to grow your team, but the costs are different from employing a qualified electrician. Here is what to budget:

Wages: Apprentice minimum wage rates for 2025/26 are £6.40 per hour for apprentices in their first year or under 19, and the age-appropriate National Minimum Wage thereafter. A first-year apprentice working 37.5 hours per week costs approximately £12,480 per year. A third-year apprentice aged 21 or over costs approximately £21,840 (at the National Living Wage rate of £11.44 per hour).

Training costs: The apprenticeship training itself may be funded through the Apprenticeship Levy (if applicable) or government co-funding. For non-levy employers, the government pays 95% of training costs with most approved training providers. Your contribution is 5% of the training cost, which is typically £600 to £900 over the full apprenticeship. You may also be eligible for a £1,000 incentive payment for hiring an apprentice.

Productivity: An apprentice is not immediately productive. In year one, they may contribute 20% to 30% of a qualified electrician's output. By year three, this rises to 60% to 80%. You must factor in the supervision time — a qualified electrician mentoring an apprentice works more slowly themselves, reducing their personal productivity by 10% to 20%.

Off-the-job training: Apprentices must spend 20% of their paid working hours on off-the-job training (college, online learning, or workplace training that is not productive work). This is paid time, so you are paying for 5 days but getting approximately 4 days of productive work.

Despite these costs, a well-managed apprenticeship typically delivers a positive return by year two or three, and by the end of the apprenticeship you have a qualified electrician trained to your standards and familiar with your business.

Here is a detailed example of the total annual cost of employing a qualified electrician on a £35,000 gross salary:

This is 32% above the base salary. If the employee works 1,500 billable hours per year (after holidays, training, sick days, and admin), the cost per billable hour is £30.82. This is the minimum hourly rate at which you must bill the employee's time to break even — before adding any profit margin or overhead allocation.

Use the break-even calculator to model how the employee affects your overall business break-even point, and the job profitability calculator to ensure every job covers the true cost of the staff allocated to it.