Salary is only part of the price. See what a hire really costs, and what the same work costs as a contractor.
The rule of thumb: a hire costs 1.15 to 1.4 times their base salary. On top of gross pay, the employer covers mandatory contributions (social security, unemployment insurance, pension and payroll taxes, commonly 10% to 30% depending on the country), benefits like health insurance and retirement matching, and one-time costs such as equipment and onboarding.
The employer contribution rate is the variable that moves the number most. On a $60,000 base salary with $3,000 in annual benefits and $500 in one-time setup, the first-year total runs from $69,500 where contributions are 10% to $84,500 where they reach 35%. That single variable produces the whole 1.15 to 1.4 range, which is why a total cost quoted without a country attached does not mean much.
Based on a $60,000 base salary, $3,000 in annual benefits and $500 in one-time setup costs.
Include everything you pay because that person is on your team: gross salary, mandatory employer contributions, benefits and allowances, equipment, and any one-time setup. Leave out what you would spend anyway. Recruiter fees belong to the cost of hiring, not the cost of employing, and software seats you already own are not a per-employee cost.
Two things get missed most often. The first is that contributions are frequently capped or banded, so the effective rate on a senior salary can land well below the headline rate, which makes a flat percentage a poor estimate at the top end. The second is currency. When you pay someone in another country, the amount that leaves your account and the amount that arrives in theirs are not the same once transfer fees and conversion are applied, so a budget built on gross salary quietly understates what the hire costs and overstates what the person receives.
Ontop is a global payroll and payments platform that lets companies hire and pay teams in 150+ countries, so the amount you budget is the amount that lands. You can see what that costs on the pricing page, and the people you pay hold their money in an Ontop Global Account instead of losing a slice to a forced conversion.
The gap between the employee column and the contractor column is not a discount. It is the price of employment: mandatory contributions, benefits, and the setup a company takes on when it becomes someone's employer. You get something for it. An employee can be directed day to day, held to a schedule, trained on your tools and your process, and kept for the long run with equity and progression. A contractor cannot be managed that way. That is the real trade, and it does not show up in a total.
So the question is not which column is cheaper. It is which structure the role fits. Work defined by deliverables, run on the person's own schedule with their own tools, for a scope with an end: that is contract work, and paying employer costs on top of it buys nothing. Work that needs fixed hours, direct supervision and continuity: that is employment, and the extra cost is what makes it legal.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.Getting that call wrong is the expensive outcome. A contractor who is managed like an employee is a misclassified employee, and the bill arrives later as back contributions, penalties and interest, usually well past whatever the savings were. Ontop runs both structures in 150+ countries, so the model can follow the role instead of the role bending to the model. See what each one costs on the pricing page.
Plan for 1.15 to 1.4 times the base salary, once employer contributions, benefits and setup costs are included. The default scenario in this calculator, 15% contributions plus $3,000 in benefits and $500 in setup, puts a $60,000 salary at $72,500 in the first year. The multiplier rises with the contribution rate of the country you hire in.
Mandatory payments on top of gross salary: social security, unemployment insurance, pension and payroll taxes. Rates vary by country, commonly 10% to 30%.
Health insurance, retirement matching, allowances and stipends: everything paid per employee beyond salary and mandatory contributions.
Yes. Employer contribution rates differ widely by country, so the same salary can carry a very different total cost depending on where the person is hired. Ontop is a global payroll and payments platform that lets companies hire and pay teams in 150+ countries.
Usually yes, because a contract rate carries no employer contributions, no benefits and no setup cost, so the same pay to the person costs the company less. On a $60,000 role with 15% contributions, $3,000 in annual benefits and $500 in setup, the employee structure runs about $11,900 higher in the first year, roughly 20% more. Cost is not what decides it. A role can only be contracted if the work is genuinely independent, and a contractor managed like an employee is a misclassified employee.
Employees or contractors, in 150+ countries. Ontop runs contracts, contributions and payouts. See it live in 20 minutes.