Employer contributions explained

Employer contributions are the social security and payroll taxes an employer pays on top of an employee's salary. They are not deducted from the salary; they are an additional cost. This site computes them from the statutory rates, caps and thresholds published by each country's tax and social security authorities, item by item.

Employer and employee contributions

Most countries split contributions into two parts. The employee part is deducted from gross salary, so it is already inside the base salary figure. The employer part is paid in addition to gross salary. Only the employer part is a line in the cost breakdown. Income tax withheld from the employee is also inside the gross salary and does not appear as a separate cost.

How each item is computed

Each statutory item in a country record has a rate and, where the law sets them, a cap, a floor or a threshold. The formula applies them as follows:

• No cap. The rate applies to the whole base salary.
• Cap. The rate applies to salary up to the annual cap; salary above the cap carries no contribution for that item.
• Floor. Where the law sets a minimum contribution base, the rate applies to the higher of salary and the floor.
• Threshold. Where the contribution is due only on earnings above a threshold, the rate applies to the part of salary above it.
• Fixed amounts. A fixed annual charge is added as it is.
• Pay-level condition. Where the law makes an item due only above or only below a pay level, the item is counted only when the salary meets the condition. Otherwise it adds nothing: the country and breakdown pages show the condition and mark the item as not applied at that salary.

The employer contributions line is the sum of the items charged at the salary. Where a country page adds up the rates, the sum covers only the items charged at the published salaries, and a rate given as a range counts at its midpoint. Contributions apply to base salary only, not to benefits or equipment. The full method is on the formula page.

Worked example

Why the share of salary changes with level

Where an item has a cap, the contribution stops growing once salary passes the cap. A senior salary above the cap therefore carries a smaller share of contributions than a junior salary below it, even at the same statutory rate. Where a country has no caps, the share is the same at every level. The breakdown pages show the share for each level.

Typical items

Contribution items differ between countries. The items in country records include:

• pension or old-age insurance;
• health insurance;
• unemployment insurance;
• workplace accident or occupational injury insurance;
• payroll taxes and levies, for example for training funds;
• in some countries, a contribution to a severance or housing fund.

Most items on a country page cite the tax authority, social security agency or statute that sets them. Some items cite only a published secondary summary of the law, such as a PwC or KPMG country tax summary, a law or accounting firm's summary or a press or bar journal summary of a statute, because the authority page could not be reached or did not state the rate when the data was collected; the source list labels those "Secondary legal summary". Every source shows the date it was accessed and the date it was verified.

What is not in this line

Mandatory benefits, such as an extra month of salary or required insurance not run as a contribution, are on their own line. The mandatory bonuses guide covers them. Voluntary benefits are on a separate line again.

The figures are estimates for budgeting. They are not tax or payroll advice. Statutory rates change; check the cited authority before using a figure in a contract or filing.

Related pages

• Cost by country
• Formula
• Methodology
• Employee model
• Fully loaded cost of a QA engineer