The Hidden Costs Of Hiring Employees

The Hidden Costs Of Hiring Employees

Hiring employees is a big decision. Not only do you have to consider the responsibility but also the numerous costs that come with it. While many employers budget for the wages that they will be giving their employees, other expenses can sometimes be overlooked. Here are just some of the hidden costs that come with hiring employees and how you can make these costs more affordable.


All employers are required to take out employer’s liability insurance. This protects you if an employee falls ill or is injured as a result of your work, helping to cover any costs that may be the result of this.

Liability insurance rates can vary. It’s worth taking your time to compare rates – try out sites like that specialise in low-cost insurance. You may also be able to lower your rates by investing in strong health and safety measures or by raising your deductible.


You may need to invest in extra equipment for your employees to use. If you work in a private office and are hiring a personal assistant to work with you, consider whether you need to buy a desk and computer. In sectors like retail, you may want to consider uniforms, while health and safety equipment could be important if you run a construction company.

Spend your time shopping around for such equipment. Used equipment could be cheaper, but you need to be sure that it’s good quality – offering employees poor quality equipment could make them feel less valued.

Employee benefits

There are certain employee benefits that are compulsory to pay out as an employer. This includes holiday pay, sick pay, overtime, maternity pay and a pension contribution. Make sure that you can afford all of these costs.

Some companies may also offer added benefits such as private health insurance, a company car or bonuses. These added benefits could help to attract employees and could reduce employee turnover, potentially making them worth the extra cost.

To calculate and manage all of these expenses, it could be worth investing in HR software or hiring someone to handle all of these costs. This itself could be another cost to consider. Fortunately, there are lots of cheap software options out there including these free programs at There are also lots of payroll accountants out there that you can hire cheaply.


It could also be worth considering the recruitment costs. You may have to pay to post job adverts on certain listing sites. If you’re hiring a recruitment company to help you, this will also be a big added cost to factor in.

With your first employees, you may want to save money by doing some DIY recruitment. There are lots of free places to post job adverts – you could strategically find locations to put up posters or use social media. 

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