The True Cost Formula
Total cost = Gross salary × 1.30 to 1.40. A £25,000 salary costs £32,500-35,000 when you include employer NI (13.8%), pension (3%), holiday pay, training, equipment, and management time. Make sure your revenue can cover this with room to spare before hiring.
5 Signs You're Ready to Hire
You're turning down orders
Consistently losing revenue because you can't fulfil demand means hiring will pay for itself.
Working 70+ hour weeks
Burnout is coming. If you can't sustain the pace, your business will suffer.
Revenue covers salary + 50%
Monthly revenue should cover the new salary plus a 50% buffer for safety.
Specific tasks bottleneck you
If prep, cleaning, or admin is stopping you from higher-value work, delegate it.
You've been profitable for 6+ months
Consistent profitability indicates sustainable demand, not a temporary spike.
Don't hire to “grow into” revenue. Hire because current demand requires it. Many food businesses fail by hiring too early, before they have consistent revenue to support the cost.
True Cost of Employment
Example based on £25,000 annual salary:
| Cost Item | Amount | Notes |
|---|---|---|
| Gross salary | £25,000 | Base annual salary |
| Employer NI (13.8%) | £2,194 | On earnings above £9,100 |
| Pension (3% min) | £750 | Auto-enrolment requirement |
| Holiday pay (5.6 weeks) | Included | 28 days for full-time |
| Training & food safety | £200-500 | Level 2 minimum, annual refresher |
| Uniform/equipment | £100-300 | Chef whites, shoes, knives |
| Recruitment costs | £200-500 | Job ads, trial shifts |
| Total year 1 | £28,500-29,500 | 14-18% above base salary |
Legal Requirements Checklist
Critical: Missing right-to-work checks can result in fines up to £20,000 per illegal worker. Always verify documents (passport, visa, share code) and keep copies. Use the government's online checking service for non-UK nationals.
Common First Hires
Part-Time Prep Cook
Handles vegetable prep, basic cooking, cleaning. Frees you for customer-facing work.
£10-12/hour
~£8,500-10,000/year
Weekend Kitchen Help
Covers your busiest periods. Often students or those with other jobs.
£10-13/hour
~£6,500-10,000/year
Full-Time Chef/Cook
Takes over daily production. You focus on business development and sales.
£25,000-32,000/year
True cost: £32,500-42,000
Written by
James Mitchell
Ghost Kitchen Operations Director & Industry Expert
Frequently Asked Questions
How much does it really cost to hire an employee in the UK?
Expect to pay 30-40% on top of the gross salary. For a £25,000/year employee: add employer NI (13.8% on earnings above £9,100 = ~£2,200), pension (3% minimum = £750), training costs (£200-500), equipment/uniform (£100-300). Total cost is approximately £28,000-29,500 for a £25,000 salary. This excludes recruitment costs and management time.
What legal requirements must I meet before hiring?
Before your first employee starts: (1) Register as an employer with HMRC, (2) Set up PAYE payroll, (3) Check right to work documents (passport or visa), (4) Provide a written contract on day 1, (5) Get employers liability insurance (legally required, minimum £5M), (6) Set up auto-enrolment pension. Missing any of these carries significant fines.
When should I hire my first employee?
Hire when: you're consistently turning down orders due to capacity, you're working unsustainable hours (70+/week), your monthly revenue comfortably covers the salary plus 50% buffer, and you've been profitable for 6+ months. Don't hire to "grow into" revenue - hire because current demand requires it.
Should I hire full-time or part-time first?
Start part-time (16-20 hours/week) if you're unsure about demand consistency. This reduces risk while you test the working relationship. Part-time staff have the same rights as full-time (pro-rated), so there's no legal difference. Many food businesses start with part-time prep help or weekend staff.
What food safety training do employees need?
All food handlers need Level 2 Food Hygiene certification (£30-100, half-day course or online). Supervisors should have Level 3. Training must be completed before they handle food. Refresher training every 3 years is recommended. Keep training records - EHO inspectors will check.
Can I hire someone as self-employed or freelance?
Only if they genuinely are self-employed - they set their own hours, work for multiple clients, provide their own equipment, and you don't control how they work. HMRC is very strict about "disguised employment." Most kitchen staff will be employees. Misclassifying employees as self-employed results in backdated tax, NI, and penalties.
What should be in an employment contract?
Essential terms: job title and duties, start date, salary and payment frequency, working hours, holiday entitlement (minimum 28 days for full-time), notice period, probation period, sick pay policy, pension details, and any restrictive covenants. Provide the contract before or on day 1 - it's a legal requirement.
How do I set up PAYE payroll?
Register as an employer with HMRC (online, takes a few days). Choose payroll software (free options like HMRC Basic PAYE Tools, or paid like Xero, QuickBooks). Run payroll before each payday, deduct tax and NI from employee wages, and report to HMRC using RTI (Real Time Information). Pay HMRC monthly. Consider outsourcing to an accountant (£30-50/month) for your first year.