True cost of an employee: salary plus employer UIF and SDL.
Total employment cost
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Employer UIF
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SDL
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Why the salary is only part of the bill
When an employer agrees a salary, the cost to the business is larger than that number. On top of the cash salary sit two employer-borne charges that never appear on the employee's payslip: the employer's share of UIF, and the skills development levy. This calculator adds those to the salary to show the true annual cost of an employee, the figure a business owner needs for budgeting, costing a project, or deciding whether a hire is affordable. PAYE and the employee's own UIF do not belong here, because those come out of the salary the employee was already promised, not on top of it.
The distinction between deductions from pay and costs on top of pay is the whole point. PAYE reduces what the worker takes home but costs the employer nothing extra. Employer UIF and the levy are genuine additional outflows from the business. Mixing the two is the most common way people miscount the cost of a team.
Costing a R480,000 hire
Take the defaults: an annual salary of R480,000 in a business with a total payroll of R2,000,000. The employer pays UIF at 1 percent of monthly remuneration, but only up to a monthly ceiling, and the skills development levy at 1 percent of payroll because the payroll is above the exemption threshold. Using the rates this calculator applies, the cost builds up like this.
| Component | Annual amount |
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So the R480,000 salary really costs the business about R486,925, roughly R6,925 more than the headline. On this salary the on-costs add only about 1.4 percent, and that is because both charges are small or capped. The UIF is tiny here precisely because the monthly salary of R40,000 far exceeds the R17,712 ceiling, so the 1 percent is charged on R17,712, not on the full R40,000. The chart above shows the modest wedge the two levies add above the salary.
The exemptions and caps that change the answer
Two thresholds do real work in this calculation. The UIF ceiling means the employer's 1 percent is capped per employee, so for anyone earning above the monthly ceiling the UIF cost is flat, no matter how high the salary climbs. The skills development levy only applies if the business's total annual payroll exceeds the exemption threshold, which the calculator applies at R500,000. A small business under that line pays no levy at all, which is why the tool drops the SDL to zero and says so in its note when the payroll is below the threshold.
For a lower-paid worker the picture shifts. If someone earns below the UIF ceiling, the employer's 1 percent is charged on the full salary, so UIF becomes a larger slice of the on-costs. The common mistake here is to apply 1 percent UIF to a high salary in full and overstate the cost, or to forget the levy entirely on a payroll that has grown past the exemption line. This tool is built for employers, payroll staff, and founders pricing the genuine cost of headcount, and it deliberately leaves out the employee's own deductions so the number means what a business needs it to mean.
Does this include the employee's own UIF and PAYE?
No, and that is intentional. PAYE and the employee's 1 percent UIF are withheld from the salary the worker was already offered, so they are not extra cost to the employer. This tool counts only what the business pays in addition to the salary: the employer's UIF share and the skills levy. The salary line already accounts for whatever is later deducted from it.
Are benefits like medical aid or pension contributions in this figure?
Not unless you build them into the salary input. Employer contributions to a retirement fund or a medical scheme are real additional costs, but they vary so widely that the tool does not assume them. If your business pays them, add the annual employer contribution to the salary you enter, and confirm the contribution rules and any related tax treatment with SARS.