Is there a formula for calculating hourly payroll expenses per employee?
That includes taking into consideration benefits paid, i.e., dental, medical, vacation, 401(k).
Get the working capital your business needs from Entrepreneur Lending, powered by CAN Capital. Learn More »If you are seeking specifically accurate information by pay grade or job, you really must look at the cost per employee to figure out the
hourly add-on for benefits.
There are many, many different types of benefits plans and programs; and the actual cost to the company depends upon what the employee chooses to use. For example, often one company offers a variety of options regarding medical insurance plans (PEO, PPO, HMO, etc.) and often different levels are offered within each kind of plan. Some employees opt for family coverage; some choose single coverage; some buy no insurance coverage. Some choose a low deductible and some choose a high deductible and HSA.
The same would be true for other benefits offered (e.g., dental insurance).There are different choices costing companies different amounts. Vacation allotments to employees may depend on length of time with the company; and the cost of each employee's vacation would depend on his or her actual hourly pay rate. Costs for 401(k) expenditures would vary based on level of participation and the company match program.
Well, you can see why an accurate per hour benefits load would need to be put together almost on a case-by-case basis.
There are software application programs that calculate actual benefits "loads" for each employee once you input the information. Perhaps your human resource information system offers this feature. Also, you can develop your own Excel spreadsheet to do the same thing.
Some benefits providers (i.e., insurance brokers) make available annual benefits statements that inform each employee about exactly what
his or her benefits cost the employer. Ask your employee benefits broker if he or she can do this for you. If so, he or she will need information from you about internal benefits such as vacation allotments, bereavement leave policies, and other benefits that the employer pays directly to the employee. Amounts paid for unemployment insurance and
workers compensation would also need to be included when you calculate benefits load.