Entrepreneur: how much does a permanent contract really cost?

Do you want to hire an employee on a permanent contract? It’s awesome ! But there is no question of getting started without knowing exactly how much it will cost. Without this step, it would be impossible for you to calculate the profitability of hiring (the cost/benefit ratio) and to establish a reliable financial forecast.

Generally, the cost of an employee is determined by the sum of direct and indirect costs. How then do you know what it will cost you to hire a new employee on a permanent contract? Answers in this article!

How to determine the cost of hiring on a permanent contract?

To determine the actual cost of your hiring, certain criteria will have to be taken into account to make the calculation. Let’s discover them together.

Estimate the cost of an employee and his net salary

To know the cost of hiring on a permanent contract, it will be necessary to make an estimate of the cost of the employee and determine his salary. gross to net. To do this, the sum of the gross salary must be added to the employer’s contributions. Then, it may be necessary to take into account the general reduction in employer contributions, hiring aid and the employment competitiveness tax credit.

Indirect costs for the employer

Indirect costs take into account all the financial means necessary for the employee to carry out his work. These are charges that cannot be directly attributed to the employee, but must be taken into account during recruitment. These indirect charges include:

  • equipment;
  • tools;
  • the computer;
  • office supplies;
  • the rental of his workspace;

This expense category can also take into account other expense items such as:

  • the time spent with the employee to train him in his new position;
  • training and recruitment costs;
  • renting their workspace.

The direct costs of the employee in the company

Direct charges are all expenses directly related to the employee and employer charges. To calculate the total amount of direct expenses of an employee within the framework ofa job on a permanent contract, it must be based on the gross salary. It is from the latter that the employee and employer social charges are deducted.

➤ Salary social charges

On average, these charges represent 22% of the gross salary and relate to the various social organizations. For example, if you recruit an employee at the minimum wage of €1,800, here are the calculations:

  • 1800 x 0.22 = €396 in payroll costs;
  • 1800 – 396 = €1404 which will be the net remuneration received by the employee.

➤ Calculation of employer contributions

The company is required to pay employers’ contributions up to an average of 42% on employees. With the previous example of €1800 in salary, the calculation will be done this way: 1800 x 0.42 = €756 in employer contributions.

The total cost of an employee who receives €1,800 gross will be: €1,800 (gross salary) + €756 (employer’s contributions), i.e. a total of €2,556. As a recruiter, this figure is the real cost for your hiring on a permanent contract.

How to reduce the cost amount of your employee?

In order to help employers, the State provides them with measures intended to help companies reduce the cost of an employee. There are three aids, namely:

  • the CICE;
  • the Fillon Law;
  • the CUI-CIE.

Before proceeding with any recruitment, it is important to find out about these organizations. It would be very unfortunate for you not to take advantage of it.

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