Glossary · Commercials
What is Employment burden
Also called: employer burden, burden rate, on-costs.
Definition
Every employer cost on top of the pay rate: payroll taxes, workers' compensation, holiday accrual and benefits. Typically 12% to 16% in the US.
Applies to: US and UK · Reviewed by James Doyle
In practice
In the US, burden usually means FICA, FUTA and SUTA, workers' compensation premium and any benefits — around 12.5% as a planning figure, higher in states with expensive comp rates or for manual trades.
In the UK the equivalent is employer National Insurance, pension auto-enrolment and holiday pay accrual, which together commonly land near 20% of pay for a PAYE temp.
Common mistake
Modelling burden as a flat national number. Workers' comp rates vary by state and by job code — a warehouse desk quote and a nursing quote are not the same business.
Related terms
Pay rate
The hourly rate paid to the contractor before employer taxes and insurance. It is the input to every bill rate calculation, not the cost of employing them.
ReadBill rate
The hourly rate an agency charges its client for a contractor. It has to cover the pay rate, employment burden, funding cost and the agency's margin.
ReadGross margin
The share of the bill rate left after paying the contractor and their employment burden. It is the money the agency actually runs on.
Read
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