Employer Cost Calculator
What an employee really costs beyond gross pay — pension, severance, study fund, National Insurance and recuperation pay, per month and per year.
The calculator shows an estimate of employer cost based on the rates you entered. National Insurance rates, ceilings and thresholds are updated from time to time at the start of the year, so every rate here is editable — check with your advisor or bookkeeper that the values match the relevant tax year. The calculation does not include payroll tax, special contributions in certain industries, or hiring and termination costs. It is not tax, pension or legal advice.
What employer cost is made of
Gross pay is only the start
When people talk about an employee's salary they almost always mean gross pay — the figure at the top of the payslip. But the amount that leaves the company is larger, because on top of gross pay the employer pays contributions that are not part of the employee's salary. For the basic package — pension, severance, National Insurance and recuperation pay — that adds about 20% on top of gross. Where a study fund is customary it reaches about 27%, and benefits such as a car, meals and insurance push it higher still.
Pension and severance
Under the mandatory pension extension order, the employer contributes 6.5% to employer contributions and 6% to the severance component — 12.5% of the insured salary. An important distinction: the employee contributes another 6%, but that is deducted from their pay and is not an extra cost to the employer. The severance component is in effect a fund building up toward the end of employment, so it is a real cost even though it is paid to the pension fund and not to the employee.
National Insurance in two tiers
The employer's National Insurance (Bituah Leumi) contributions are not a flat percentage. A reduced rate applies to the part of the salary up to 60% of the national average wage, and a full rate applies to the part above it — up to the maximum income ceiling for contributions. This means the marginal cost of a raise for a high earner differs from that for a low earner.
Recuperation pay and benefits
Recuperation pay (havraa) is paid once a year according to seniority and job percentage, so it makes sense to spread it across the months when looking at monthly cost. Alongside it there are components that vary between workplaces — study fund, car, meals, insurance and equipment. The "Other costs" field is for those.
What is not included here
Overtime and Shabbat and holiday premiums are not part of the fixed gross pay, but they increase the actual calculation base — and the same contributions apply to them. If your business has a significant amount of overtime, the real cost is higher than shown here. You can estimate the extra with the overtime calculator and add it to the gross pay.
Questions about employer cost
How much above gross pay?
About 20% for the basic package, and about 27% where there is a study fund.
How much pension does the employer contribute?
6.5% employer contributions plus 6% severance — 12.5% of the insured salary.
Is a study fund mandatory?
Not in most of the economy. It is common under an agreement — 7.5% employer, 2.5% employee.
What about overtime?
It is not part of the fixed gross pay, but it raises the base and the contributions on it.
Plan your costs, keep working hours in one place
A good estimate of employer cost depends on the right base. RayClock calculates the actual hours for every employee — including overtime, Shabbat and holidays per the Hebrew calendar and break deductions — and produces a report ready for your payroll system.