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:
- Reviewing CV’s, interviewing and follow-up
- Preparing a contract & employment paperwork
- Legal fees associated with employment
- Time for induction and training
- Purchase/maintenance of workspace & facilities
- Office supplies, furniture, equipment, etc.
- NIC, SSP, Pensions, Holiday Pay, Annual wages
- Payroll administration fees
- Downtime, absenteeism, smoke & coffee breaks
- Holiday, sickness, maternity/paternity leave
COST COMPARISON of an Employee vs a Virtual Assistant
|Admin/Secretarial Employee||Virtual Assistant|
|Employee Base Hourly Rate||£10 per hour||VA Hourly Rate||£25 per hour|
|BENEFITS(incl. sick pay, employer NIC, holiday pay, pension) – Add 35%||£3.50 per hour||No benefits||£0|
|OVERHEADS: including office space, equipment, supplies, and furniture – Add 30%||£3.00 per hour||No overheads||£0|
|LEGAL COSTS: Employment costs, HR costs, payroll costs, training – Add 50%||£5.00 per hour||No legal costs
|Total hourly rate||£21.5 per hour||Total hourly rate||£25 per hour|
|Total annual costs based on 2080 hours per year. The employee time is greater as you pay for downtime including: equipment failure, coffee & smoke breaks, water cooler chats and un-authorized computer use.||£44,720 per year||Total annual costs based on 1040 hours per year. A VA can typically crush 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.||£26,000 per year|
Difference in costs:
£44,720 – 26,000 = £18,720
|£44,720||Savings of £18,720||£26,000|
|© Information derived from : Lisa Taliga of www.virtualpabusiness.com & Belinda Newton of the HR Dept – www.hrdept.co.uk|
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 firstname.lastname@example.org
Next feature: What is your hourly rate? Do you know. Top Tips on how your hourly rate and whether you are working to your full potential.