We have prepared a calculator for you that performs two functions. Firstly, it shows the cost of an employee including taxes and variable costs.
Secondly, it shows at what rate we should invoice our customers in order to make it profitable to employ an employee. The calculator takes into account sick days and internal employee time.
We encourage you to test different scenarios.
This section contains the basic components of salary and working time. Below is a description of items that may be of concern.
Number of days worked per year - on average there are 230 days in a calendar year. If an employee only works for us half of the year then we enter half, i.e. 115 days.
Number of working hours per day - the standard working time in Norway is 7.5 hours. As with the number of days, in a situation where we have a part-time employee we enter 3.75 hours.
Feriepenger - The minimum feriepenger rate is 10.2%. The rate is 12% for 5 weeks of holidays. An employee over 60 years of age is entitled to a rate of 12.5%.
Arbeidsgiveravgift - The basic AGA rate is 14.1. Depending on the region of Norway, rates may be lower https://www.skatteetaten.no/satser/arbeidsgiveravgift/.
OTP - The minimum mandatory pension insurance rate is 2%. Some companies, however, apply a rate of 3-5%.
In this section we fill in the costs we have to incur additionally for hiring a new employee on an annual basis. If any of the items are out of date for your company then leave them blank.
Insurance (e.g. yrkeskade) - In many industries, this is compulsory insurance and a cost that the employer always has to bear.
Premises costs - hiring a new person may require an additional workstation, which will increase the cost of rent, electricity consumption, etc.
Equipment costs (computer, phone, iPad, etc.) - the costs we have to incur in relation to equipping a workstation for an employed person.
Learning (leader time spent on implementation) - When an internal person from the company has to spend time training a new person, we should include this in our calculations. We are assuming here that the training person could be working with customers and generating profit for the company at the same time. To simplify the calculation, we can give the number of hours * rate per hour of the trainer * 1.3 to get the cost including employee taxes.
Courses, training - In many industries, we have to send employees to the required training every year.
Tools - all the other tools we have to acquire in connection with hiring a new person. It is worth noting that some of the tools we have to acquire only in the first year of work, so this value should be averaged out.
Accounting - hiring another person generates an additional accounting cost in the form of tasks such as payment preparation and related matters, sick pay, etc.
Auto - we enter the car positions here when it is necessary to hire another person in the company. This is often the case, for example, in electrical or plumbing companies, where the employee is a one-man "team".
Company hourly rate for services - we enter the average rate we invoice clients for the hours our employee has worked.
Company income per employee hour / Annual optimum income - these items show us how much we earn per employee per hour and per year.
Number of sick days - In case of sickness, the first 16 working days are covered by the employer. We count the working days in the period of the first 16 days, so it is usually 11- 12 days. If an employee falls ill twice a year for a period of 2 weeks, the employer covers 20-24 working days. It is also worth remembering that every employee is entitled to egenmelding (3-day sick leave without a doctor's certificate) 4 times a year.
Internal (intern) work during the day - if an employee has time during the day that we cannot invoice to a customer it is worth including this in our calculations. This could be, for example, shopping for goods in the shop for which the customer will not pay, or fixing our own mistakes.
Employee income - This item shows how much we were able to invoice the client for the hours that our employee actually worked.
Employee cost including non-productive hours - this indicator shows how much one hour of work costs us in real terms. We can take this as an indication of how much we should be invoicing our client just to cover any costs associated with an employee.
The calculator is a tool to test different scenarios and make you aware of the real costs. However, every company's situation is different so we encourage you to contact your accountancy office to work out the exact cost-effectiveness of hiring, or to make a professional budget.
