NLW · £12.21/hr

Employer cost at National Living Wage — £12.21/hour (2025/26)

An employee paid £12.21 per hour, working full-time (37.5 hours per week), earns approximately £23,810 per year. The true employer cost is higher: employer NI at 15% on earnings above the £5,000 secondary threshold adds £2,821 per year, and minimum auto-enrolment pension at 3% adds £527 per year on qualifying earnings. Total employer cost: approximately £27,158 per year — or roughly £13.93 per productive hour before overheads.

UK scope: England, Scotland, Wales and Northern Ireland employer payroll planning for the 2025/26 tax year.

Sample total cost

£27,159

£2,263 per month on £23,810 salary

Employer NI

£2,822

15% above £5,000 secondary threshold (2025/26)

Pension + overheads

£527

Baseline employer pension plus configured overheads

Key assumptions — UK 2025/26

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

Hourly rate: £12.21/hour.
Full-time annual salary (37.5 hrs/wk): approximately £23,810/year.
Employer NI (15% above £5,000): approximately £2,821/year.
Minimum employer pension (3% on qualifying earnings): approximately £527/year.
Total statutory employer cost full-time: approximately £27,158/year.
At 20 hrs/week: salary ≈ £12,698 · total employer cost ≈ £14,046/year.
At 30 hrs/week: salary ≈ £19,048 · total employer cost ≈ £21,539/year.

Use the live tools

Calculate exact employer cost Cost of employing by salary 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 2025/26.

Auto-enrolment pension

Minimum employer contribution 3% on qualifying earnings.

Employment Allowance

Up to £10,500 relief in 2025/26 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 £12.21/hour employee cost an employer per year?

A full-time employee at £12.21/hour (37.5 hours per week) earns approximately £23,810 per year. Adding employer NI of approximately £2,821 and minimum pension of approximately £527, the total employer cost before overheads is approximately £27,158 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 2025/26. 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: 04 April 2026. Estimates use 2025/26 assumptions and are for planning, not legal or tax advice.