NLW · £12.71/hr

Employer cost at National Living Wage — £12.71/hour (2026/27)

Quick answer

Paying the 2026/27 National Living Wage of £12.71 an hour actually costs an employer about £14.52 an hour. A full-time employee (37.5 hours) costs £28,309 a year: £24,784.50 salary, £2,968 employer NI (15% above £5,000) and £556 minimum pension. Employers pay 0% NI on staff under 21 and apprentices under 25, and Employment Allowance can remove up to £10,500 of NI a year.

An employee paid £12.71 per hour, working full-time (37.5 hours per week), earns approximately £24,785 per year. The true employer cost is higher: employer NI at 15% on earnings above the £5,000 secondary threshold adds £2,967 per year, and minimum auto-enrolment pension at 3% adds £556 per year on qualifying earnings. Total employer cost: approximately £28,309 per year — or roughly £14.52 per productive hour before overheads.

UK scope: England, Scotland, Wales and Northern Ireland employer payroll planning for the 2026/27 tax year.

Calculate exact employer cost Full employer cost calculator Cost by salary Employer NI by salary

Sample total cost

£28,309

£2,359 per month on £24,785 salary

Employer NI

£2,968

15% above £5,000 secondary threshold (2026/27)

Pension + overheads

£556

Baseline employer pension plus configured overheads

Key assumptions — UK 2026/27
Employer NI: 15% on earnings above the £5,000 secondary threshold
Employer pension: minimum 3% on qualifying earnings £6,240–£50,270
Employment Allowance: up to £10,500 off the NI bill for eligible employers
Worked examples: £30k salary → £34,464/yr · £35k → £40,363/yr · £50k → £58,063/yr

What this page helps you check

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Calculate exact employer cost £12.71 an hour is how much a year? Cost of employing by salary Employer NI by salary Auto-enrolment pension calculator

UK assumptions used

Employer NI

15% above £5,000 secondary threshold for 2026/27.

Auto-enrolment pension

Minimum employer contribution 3% on qualifying earnings.

Employment Allowance

Up to £10,500 relief in 2026/27 for eligible employers.

Official UK references

HMRC rates and thresholds Employment Allowance Pensions Regulator guidance Our methodology Our source list

Frequently asked questions

What does a £12.71/hour employee cost an employer per year?
A full-time employee at £12.71/hour (37.5 hours per week) earns approximately £24,785 per year. Adding employer NI of approximately £2,967 and minimum pension of approximately £556, the total employer cost before overheads is approximately £28,309 per year.
Does the employer NI rate change for lower-paid workers?
No — employer NI is always 15% on earnings above the £5,000 secondary threshold for 2026/27. There is no reduced rate for lower-paid workers. The practical effect is that lower wages carry a higher NI burden as a percentage of salary, because a larger proportion of total earnings falls in the NIable band relative to the threshold.
How does hourly employer cost differ from hourly wage?
The hourly wage is what the employee receives. The true employer hourly cost includes the wage plus the employer's share of NI and pension contributions. For a £15/hour worker on full-time hours, the true employer cost per hour is approximately £17.00–£17.50 depending on pension rate and overheads.

UK coverage only. Last reviewed: 02 October 2026. Estimates use 2026/27 assumptions and are for planning, not legal or tax advice.

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Written and reviewed by James Whitfield and the editorial team.

Every figure is checked against current HMRC and GOV.UK guidance and reviewed for the 2026/27 tax year. We explain the numbers in plain English with worked examples. Editorial standards · About us