Free Labour Cost Calculator
Enter your team size, hours, and hourly rate to see your total weekly, monthly, and annual employer labour costs — including NI and pension.
Updated for 2025/26 National Insurance and auto-enrolment rates
Your team details
National Living Wage (2025): £12.21/hr for 21+
Include employer costs
Per week
£1,644
Per month
£7,124
Per year
£85,483
Labour cost percentage
Based on £5,000 weekly revenue
32.9%
Weekly breakdown
Estimates only. Based on 2025/26 NI and auto-enrolment rates. Always verify with your accountant.
What is labour cost percentage and why does it matter?
Labour cost percentage is the proportion of your revenue spent on staff wages and associated costs. It's one of the most important KPIs in any hospitality or retail business — and the one most commonly tracked too late.
The formula is simple: Labour Cost % = (Total Labour Costs ÷ Total Revenue) × 100
A cafe taking £10,000 per week and spending £2,800 on wages (including employer NI and pension) has a 28% labour cost — which is healthy. If that figure crept to £3,500 due to over-scheduling and ghost time, it rises to 35% and that's profit margin being eaten up.
Industry benchmarks (UK)
- —Cafes & coffee shops: 25–35%
- —Pubs & bars: 20–30%
- —Restaurants: 30–35%
- —Fast food & takeaways: 20–28%
- —Retail: 10–25%
- —Hotels: 30–40%
What's included in labour costs
When calculating your true employer cost, include: gross wages, employer National Insurance (13.8% above £9,100/year), employer pension contributions (minimum 3% under auto-enrolment), and any agency staff costs.
Don't include: owner's drawings for sole traders/partners, HMRC-reimbursed costs, or one-off expenses like recruitment fees.
Frequently asked questions
What is a good labour cost percentage for a cafe or restaurant?
For cafes and coffee shops, a typical labour cost percentage is 25–35%. For restaurants it's 30–35%, pubs 20–30%, and fast food or takeaways 20–28%. These are guides — your target depends on your pricing and model.
Does employer National Insurance apply to all employees?
Employer NI applies to earnings above the Secondary Threshold (£9,100 per year in 2025/26). The rate is 13.8%. Staff earning below this threshold don't attract employer NI contributions.
What is the minimum employer pension contribution?
Under UK auto-enrolment rules, the minimum employer pension contribution is 3% of qualifying earnings (£6,240 to £50,270 per year for 2025/26). Eligible staff must be aged 22 or over and earn more than £10,000/year.
What is the National Living Wage in 2025?
The National Living Wage for workers aged 21 and over is £12.21 per hour from April 2025. The rate for 18–20 year olds is £10.00/hr and for under 18s it's £7.55/hr.
How do I reduce my labour cost percentage?
The most effective approaches are: accurate time tracking to eliminate ghost time, building rotas around revenue forecasts rather than habit, setting a wage budget before scheduling shifts, and reviewing actual vs scheduled hours weekly.
Track live labour costs automatically
ClockIt calculates your labour cost percentage from real GPS clock-in data — so you always know where you stand, without the manual maths.
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