How Much Does It Cost When You Lose An Employee?.

How much does it cost when you lose an employee?


You may think keeping your employees is expensive, but have you considered how much it costs to lose one?


Losing a member of staff has a tangible effect on your financial position, from the costs of recruitment to upskilling a new team member. It’s important to know this cost so you can factor it into your plans.


Here are the things you need to consider.


Why is it so expensive to replace an employee?

Ideally, you won’t find yourself in the hiring position too often. Not only does it take up a large chunk of your time, but it costs you too.


There are a number of factors that contribute to the overall cost of recruiting fresh talent to your team.


Recruitment and advertising


The first step when looking for a new employee is to advertise the vacancy. You wouldn’t think it would be that expensive, but whether you use an agency or pay for premium listings on sites like Indeed, you’ll end up forking out for it. Bear in mind recruitment agencies can charge up to 20% of a new employee’s annual salary!


Even if you do it in-house, you’re spending money to pay someone to go through the rigorous process of posting ads and interviewing candidates (when they could be doing other things for your business).


Training costs


Although you’ll be looking for people with a similar background to your advertised role, it’s highly likely you’ll still need to train them. No matter how experienced someone is, they won’t know how you run your business, and they’ll need some time to learn the ropes.


Not only will you be paying the new employee while they’re in training, but you’ll also be paying the person training them. So, if that means the trainer has to work extra hours or needs other resources to cover their own work, it’ll end up adding to your staff expenditure too.


Depending on your business, probationary periods can last anywhere up to six months, so those six months of training could be costly (but worth it in the long run).




This expense is probably more obvious than most. When you’re hiring, you have to take the new salary into consideration. Undoubtedly, you’ll want to offer a decent wage for new employees (especially if you want to stay competitive). But you’ll also need to factor in the following:


  • annual salary
  • pension contributions
  • employer’s National Insurance contributions
  • holiday/sick pay
  • maternity/paternity pay.


Legal costs


Unfortunately, sometimes having an employee leave can be troublesome. Even if it’s through no fault of your own, if an employee believes they’ve been wrongfully terminated, they might try and take legal action.


So, on top of a final paycheck, you may also have to pay for legal representation (although we hope you never have to go through this).


Talk to us

Hiring a new employee can be expensive (as we’ve discussed), so it’s important to take into account the whole cost. Thankfully, we’re good with numbers. It’s what we do. 


If you want advice on your staffing expenditure, get in touch.


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