The gross salary in an employment contract is not what an employee actually costs the company. On top of it come the employer's Social Security contributions, which in 2026 add around 31 to 32 per cent on a permanent contract. Knowing this figure is essential for budgeting a new hire, setting prices or deciding whether expanding the team makes financial sense.
What the total cost of an employee includes
The staff cost for the company is made up of the agreed gross salary, which includes the part later withheld from the employee for income tax and their own contributions, plus the employer's Social Security contribution. This contribution does not appear in the employee's net pay, but it is a mandatory expense the company pays every month.
The calculator applies the 2026 employer contribution rates to the monthly contribution base, which it obtains by dividing gross annual salary by 12 (including the pro rata share of extra payments) and capping the result at the maximum base:
- Common contingencies: 23.60 per cent, which funds pensions, sick pay for non-work-related illness and other benefits.
- Unemployment: 5.50 per cent on permanent contracts and 6.70 per cent on fixed-term contracts.
- Wage Guarantee Fund (FOGASA) and vocational training: 0.80 per cent combined.
- Intergenerational Equity Mechanism (MEI): 0.75 per cent payable by the employer in 2026.
- Workplace accidents and occupational diseases (AT/EP): the rate depends on the activity; the calculator suggests an indicative 1.50 per cent that you can change (for office work it is 1 per cent).
- Additional solidarity contribution on the part of monthly pay above the maximum base, where applicable.
How it is calculated
The basic formula is: total annual cost = gross annual salary + employer contributions, the latter being the contribution base multiplied by the sum of the rates. Excluding AT/EP, the combined rate is 30.65 per cent for a permanent contract and 31.85 per cent for a fixed-term one; with the 1.50 per cent AT/EP rate the calculator applies by default, it is 32.15 and 33.35 per cent respectively. The monthly cost is the annual total divided by 12, whether the employee is paid in 12 or 14 instalments, because extra payments are prorated monthly in the contribution base.
The AT/EP rate is the one that varies most between companies, because it is set by the premium tariff according to the economic activity (CNAE code) and the job: it is 1 per cent for office work and considerably higher in sectors such as construction. It is therefore worth adjusting that field to the company's actual rate. For information, the calculator also shows the employee's own contributions, which are not a cost to the company because they are deducted from gross pay.
Worked example
A company hires someone on a permanent contract with a gross salary of 30,000 euros a year. At the 32.15 per cent resulting from the general rates, the MEI and the default 1.50 per cent AT/EP rate, the employer contribution comes to 9,645 euros, so the annual cost is 39,645 euros, around 3,303.75 euros a month.
If the work is office-based and the workplace accident rate is set to 1 per cent, the contribution falls to 9,495 euros and the cost to 39,495 euros a year. On a fixed-term contract, the higher unemployment rate would add a further 360 euros a year.
Contribution rules in 2026
Contribution rates are set each year in the Budget Act or the annual contributions order, and they apply to the contribution base rather than directly to the agreed salary. The base includes monthly pay and the pro rata portion of extra payments, and it is bounded by a minimum base, which depends on the contribution group, and a maximum base. That is why, for very high salaries, employer contributions stop growing in proportion to pay, although since 2025 a solidarity contribution applies to the part of salary above the maximum base.
In addition, fixed-term contracts of less than 30 days trigger an extra employer contribution when they end, and there are reductions and rebates for certain groups that can lower the cost. The calculator does not apply these special cases or the minimum contribution base, so its result should be read as a general estimate.
Other costs to plan for
Beyond Social Security, hiring involves other expenses that do not appear on the payslip but do show up in the profit and loss account. Taking them into account avoids surprises when comparing the cost of an employee with outsourcing a service.
- Occupational health and safety services and medical check-ups.
- Insurance or mandatory benefits set out in the collective agreement.
- Equipment, software licences and workspace.
- Training, recruitment and the time needed to settle into the role.
- Possible severance at the end of the contract or on dismissal.