Payroll Costs and Calculations

Employer payroll costs can have a significant impact on your business’s bottom line. Understand what they are and how to manage them effectively with our expert team at Global Squirrels. We can help you evaluate your current payroll expenses, identify areas for improvement, and implement cost-saving measures that work for your business. Contact us today to learn more.

What are payroll costs?

Payroll costs encompass the financial outlay that a company bears for its workforce, comprising salaries, wages, incentives, employer taxes, insurance, retirement contributions, and other benefits.

What is included in payroll costs?

• Payroll cost refers to the total amount of money that a business spends on employee salaries and benefits.
• Payroll cost is calculated by adding gross pay and employer cost.
• Employer cost is mandatory and varies by country.
• Country-specific employee benefits plans and compensation labor laws affect employer costs.
• Employee benefits include health insurance, paid time off, retirement plans, etc.
• It includes employer-paid taxes, social security contributions, healthcare plans, and other employee benefits
• These benefits can increase the overall payroll cost.
• Including employer cost in monthly payroll is mandatory and failure to do so can result in penalties

Notes: All numbers shown are approximate figures and vary due to changes in laws. It is also almost impossible to estimate accurate numbers since various contributions have a limit on the maximum contribution and some contribution criteria change based on employee gross pay.

Payroll cost calculator

Take control of your payroll expenses! Use our Payroll Cost Calculator to streamline and manage your labor expenses with ease.

Payroll costs = Gross pay + Employer cost

How payroll costs impact business

As a business owner, you know that your employees are your biggest asset. However, employing staff comes with a range of costs that can add up quickly. From salaries and benefits to taxes and insurance, employee payroll costs can have a significant impact on your bottom line.

Direct and indirect employee costs

• Salaries and wages
• Health insurance and other benefits
• Payroll taxes and contributions to government programs
• Workers’ compensation insurance
• Retirement plans and pensions
• Training and development programs

Understanding your employee payroll costs is critical to managing your business effectively. By keeping these costs under control, you can increase your profitability and ensure that your business remains sustainable over the long term.

At Global Squirrels, we specialize in helping businesses of all sizes optimize their employee payroll costs. Our team of experts can help you evaluate your current payroll expenses, identify areas for improvement, and implement cost-saving measures that work for your business.

Whether you’re looking to reduce your labor costs or streamline your payroll processes, we have the knowledge and expertise to help. Contact us today to learn more about how we can help you manage your employee payroll costs and improve your bottom line.

Estimated payroll costs for employers in India

Payroll Contributions	Cost
Provident Fund (PF) (This contribution covers Employee’s Provident Fund (EPF) and Employee’s Pension Scheme (EPS)). EPF is for claims related to unemployment and EPS is for pension after retirement.	12% of the employee’s basic salary capped at INR 1800 (approx) per month.
Employee’s State Insurance (ESI)	3.25% of employee monthly gross pay if monthly salary< INR 21000. 0% for employees with a salary over INR 21000
Employer health insurance contribution	50% of total health insurance cost for the employee and his/her dependents. Varies from INR 200 to INR 2000 per month
Gratuity pay (Accrued and will be paid to employees after 5 years of continuous employment. Paid only after they leave the company)	15 days of gross pay for every year. Approximately 4.1% of employee’s gross salary
Total	*10% to 15% depending on the employee’s gross pay

 

*Please note that any overage fee collected as part of the employer payroll costs will be refunded to the customer by Global Squirrels upon an employee’s termination of employment.

Estimated payroll costs for employers in Pakistan

Payroll Contributions	Cost
Social Security	Ranges from 5% to 6.5% of employee gross salary based on wage levels. (Capped at PKR 1200 per month)
Employee Provident Fund (EPF)	10% of employee gross salary capped at PKR 1500 per month.
Employee Old-age Benefits Institution (EOBI)	5% of employee gross salary capped at PKR 1050 per month.
Gratuity pay (Paid to employees only after they leave the company. Mandatory in certain provinces and optional in rest of the country)	30 days of gross pay every year. Approx. 8.3% of employee gross salary.
Employer health insurance contribution	50% of the total health insurance cost for employee and his/her dependents.
Total	*15%

 

*Please note that any overage fee collected as part of the employer payroll costs will be refunded to the customer by Global Squirrels upon an employee’s termination of employment.

Estimated payroll costs for employers in Mexico

Mandatory Employee Benefits
*Please note that any overage fee collected as part of the employer payroll costs will be refunded to the customer by Global Squirrels upon an employee’s termination of employment.All numbers shown are approximate figures and vary due to changes in laws. It is also almost impossible to estimate accurate numbers since various contributions have a limit on the maximum contribution and some contribution criteria change based on employee gross pay.

Payroll Contributions	Cost
Social Security Contributions (IMSS) The contributions include for; Illness and maternity Disability and life Retirement Severance at advance/old age Childcare and social benefits Labor risk insurance	Approx. 25% of the employee gross salary
Housing fund (INFONAVIT)	Around 5% of the employee gross salary
State payroll tax (depends on employee state and gross salary)	1.8% to 4%
Christmas bonus (Aguinaldo): 15 days of pay	4.11%
Vacation pay premium (A 25% salary premium need to be paid for paid vacations. The number of PTO in a year varies from 12 to 32 depending on the employee’s tenure)	0.82% to 1.5%
Total	*36% (Approx.)
Payroll Contributions	Cost
Christmas Bonus (Aguinaldo)	15 days of pay paid once a year
Paid Time Off	12 to 32 days. 12 days after one year of service with 2 days increased for an additional year of service and capped at 32 days
Separation pay	Voluntary resignation: Seniority premium of 12 days salary for each year of service Termination with cause: Seniority premium of 12 days salary for each year of service. If an employee is terminated because of a performance issue, it cannot be considered termination with cause. Termination without cause: Three months of employee salary + 20 days of employee aggregate salary for each year of service.

Estimated payroll costs for employers in Philippines

Payroll Contributions	Cost
Social Security System, including employer contribution and provident fund (WISP)	14% capped at PHP 2880
The Home Development Mutual Fund (HDMF) (Formerly called PagIBIG)	2%
PhilHealth Contribution	5% with a minimum of PHP 250 and capped at PHP 2500.  (Rates increase annually)
13th month Pay	8.335%
Total	10% to 20% depending on the employee pay

 

Mandatory Employee Benefits

Payroll Contributions	Cost
13th month pay	Total basic salary / 12 = 13th month pay
Separation pay	The pay is ½ month pay per year of service- if the separation reasons are retrenchment of the company to save from loss, the sudden closure of functions due to bankruptcy, and incurable illness causing threat to colleagues. The pay is 1-month pay per year of service- if the employee got terminated because of the implementation of machinery or devices which doesn’t require labor, overstaffing, and impossible situations to reinstate the job position.

 

*Please note that any overage fee collected as part of the employer payroll costs will be refunded to the customer by Global Squirrels upon an employee’s termination of employment.

Employer payroll cost doesn’t include monthly platform fee and recruitment fee

All numbers shown are approximate figures and vary due to changes in laws. It is also almost impossible to estimate accurate numbers since various contributions have a limit on the maximum contribution and some contribution criteria change based on employee gross pay.