The direct wage costs for the employer include salary, vacation allowance, commissions, and profit-sharing.

Note: you must comply with the legal minimum wage. Additionally, direct wage costs are often dependent on the industry’s collective labor agreement (CAO). It is also advisable to provide competitive compensation. The vacation allowance is at least 8% of the gross wage.

The indirect wage costs include pension contributions, travel expenses, other expenses, and secondary employment conditions.

These mandatory premiums and contributions are income tax, national insurance contributions, and employee insurance contributions. These are the payroll taxes you need to remit. The actual amount you spend on personnel costs depends on the agreements with your employees. For example, you may agree on a 13th-month bonus, training allowances, or supplementary pensions. Additionally, there may be expenses related to facility management. Employees may require certain items to perform their work, such as a desk, a computer, and/or coffee.

The decision to hire personnel varies depending on the company situation. Are you a freelancer and need someone to assist with all your tasks? Or do you run a sole proprietorship with a few employees and require additional manpower to facilitate growth? In these situations, hiring a new employee involves more considerations compared to an SME with dozens of employees. Additionally, there are different factors to consider when restructuring your company after a reorganization.

If you want to hire personnel, how should you go about it? It starts with conducting a thorough search for a suitable candidate. ”Employer branding” can help you find the best candidate for your company and specific job vacancy. Once you have found this employee, make clear agreements about the work, working hours, and salary, and document them in an employment contract.

By hiring an employee, you increase their engagement and loyalty. You reduce the risk of them leaving your company, taking away their knowledge and experience. It is beneficial to have employees who are familiar with your company, work methods, and processes inside and out.

A long-term sick employee can incur significant costs, particularly for businesses with few employees. You are obligated to continue paying a sick employee for up to two years, and you may also need to find a replacement. These costs can be high. An employee on your payroll cannot be utilized solely when needed; the costs are ongoing. With a payroll or temporary worker or a freelancer, you can pay for the hours worked only. Terminating the employment of a permanent staff member is challenging (and costly). Finally, one reason not to hire personnel is the administrative burden it entails (such as maintaining accurate payroll records).

Streamline your personnel management with Tentoo

Tentoo specializes in providing solutions for employers to handle administrative and legal obligations related to personnel. By partnering with Tentoo, employers can benefit from the expertise of our experts. This enables employers to manage personnel more efficiently and effectively.