What Nobody Tells You About the Real Cost of Hiring Your First Employee

You've been doing everything yourself for long enough. The business is growing, the to-do list has developed its own personality, and every Sunday evening you have the same thought: I need to hire someone.

So you google salaries. A full-time admin or operations person sits somewhere between £26,000 and £30,000. That feels doable. You start running numbers on the back of an envelope (or, more realistically, in a Notes app at 11pm).

Here's the thing. That salary figure? It's the starting line. Not the finish.

Where the real numbers live

Let's say you're looking at £28,000. Nice round number. Reasonable for the role. Here's what it actually costs once you factor in all the stuff that doesn't make it into the job ad.

Employer's National Insurance. As of April 2025, you're paying 15% on everything your employee earns above £5,000. On a £28k salary, that comes to roughly £3,450 a year. This doesn't come out of their pay. It comes out of yours, on top of the salary. Think of it as an invisible surcharge on having an employee at all.

Pension. Auto-enrolment means you have to contribute at least 3% of qualifying earnings. On £28k that's about £690 a year. You can't opt out. It's the law.

Holiday. Every full-time employee gets 28 days paid holiday per year, bank holidays included. That's five and a half weeks where you're paying someone to not be at their desk. The salary already covers it technically, but those are 28 days where the work doesn't get done unless you do it yourself. Which somewhat defeats the purpose.

Sick pay. Statutory Sick Pay is currently £116.75 a week. Two weeks off sick costs you £233.50, and that's the legal minimum. A lot of small businesses offer something more generous to attract half-decent candidates. And unlike holiday, you can't plan for it. Someone gets the flu in January and your budget just took a hit you didn't see coming.

Recruitment. Even if you do it yourself and skip the agencies (who charge 10 to 20% of the salary, by the way), you're still writing job ads, reading CVs, running interviews, checking references. That's a solid 15 to 20 hours of your time. If your time is worth £50 an hour, that's up to £1,000 before you've even shaken hands. Go through an agency on a £28k hire and you're paying £2,800 to £5,600. For one person.

Equipment. Laptop, monitor, phone, software licences. If they're working remotely (and let's be honest, most of these roles are), you're setting up a home office. Budget £800 to £1,500. Then there's the time to get it all configured, accounts created, passwords sorted. That's your time, at least in the early days.

Add it up and try not to wince

• Salary: £28,000

• Employer's NI: roughly £3,450

• Pension: roughly £690

• Recruitment: £750 to £2,000

• Equipment: £800 to £1,500

That gets you to somewhere between £33,690 and £35,640 in year one. And I've been generous. Factor in management time, a slightly better pension to get the right candidate, maybe an agency fee, and you're nudging £37,000 to £38,000.

For context, you started this exercise thinking it would cost £28,000.

And if it doesn't work out? If they're not quite right, or the role changes, or the business hits a quiet patch? You've got notice periods to honour, potential redundancy to navigate, and the entire recruitment circus to run again from scratch.

The bit nobody budgets for

There's a cost that never makes it onto the spreadsheet, and it's the one that catches most founders off guard: you're now someone's manager.

That means answering questions, giving feedback, setting priorities, checking work, handling the occasional awkward conversation, and generally being available in a way you weren't before. In the first few months especially, a new hire needs quite a lot of you. Training, context, "how do we do this here?" questions, all of it.

You hired someone to take things off your plate. And then you added "line manage a human being" to the plate. It's not nothing.

So should you never hire?

Of course not. If you genuinely need someone 30 to 40 hours a week, permanently, growing with the business and embedded in everything you do, then hiring is the right call. The overhead is worth it because the role is big enough to justify it.

But here's the question worth sitting with: do you actually need 160 hours a month?

Most founders don't. Not at this stage. What they need is 10 to 25 hours a month of reliable, competent support. Inbox management, scheduling, admin, documents, research, maybe some social media or software setup. Important work. Work that needs doing well. But not 40-hours-a-week work.

The alternative that doesn't cost £35k

A VA on a monthly retainer gives you that support without the overhead. No employer's NI. No pension contributions. No holiday pay. No recruitment fees. No equipment budget. No notice period drama.

At Lemonade & Co., Essentials is £300 a month for 10 hours. Professional is £600 for 20 hours. Rolling monthly, 30 days' notice, no lock-in. You get someone who learns your business, knows your tools, and actually gets things done. For about 1% of what a full-time hire costs in year one.

The maths isn't subtle. £300 a month versus £35,000+ a year. And you can scale up if the work grows, or scale down if things go quiet. Try doing that with an employment contract.

The real question

It's not "can I afford to hire?" It's "do I actually need to?"

If the answer is 160 hours a month of embedded, full-time work, then yes. Go hire. Do it properly, invest in the relationship, and don't cut corners on the process.

But if what you actually need is someone brilliant handling the 10 or 20 hours of stuff that's currently eating your week? A retainer is the smarter move. By a long way.

Hiring your first employee is a milestone. Just make sure it's the right one, at the right time. Not just because the to-do list got scary.

If you're trying to figure out whether hiring or outsourcing makes more sense right now, a discovery call might help. 30 minutes, free, no pitch. Just an honest look at what you actually need. Book a free discovery call