Business tips · 2026
How much an employee costs an employer in 2026: figures with examples
Before hiring their first employee, people usually ask: “If I want to pay EUR 1,000 take-home, how much will it cost me?” The answer depends on the salary, because the formula for the tax-free allowance (NPD) changed in 2026.
What is deducted from the employee
- Sodra contributions – 19.5 %: pension 8.72 %, sickness 1.99 %, maternity 1.81 %, health 6.98 %. An extra 3 % for those in the pension accumulation scheme.
- Income tax – 20 % of salary after deducting the tax-free allowance.
- Tax-free allowance in 2026: EUR 747 if the salary does not exceed the minimum wage. For higher salaries, allowance = 747 – 0.49 × (salary – 1,153).
What the employer pays on top
Employer contributions – about 1,77 %: unemployment insurance 1.31 %, accidents at work insurance 0.14 %, Guarantee Fund 0.16 % and Long-term Employment Benefits Fund 0.16 %. For a fixed-term contract, unemployment insurance is higher at 2.03 %.
Examples for 2026
| Gross salary | NPD | Sodra 19.5 % | GPM | Take-home | Employer contributions | Cost to employer |
|---|---|---|---|---|---|---|
| EUR 1,153.00 (minimum wage) | 747,00 | 224,84 | 81,20 | 846,96 | 20,41 | 1 173,41 |
| EUR 1,500.00 | 576,97 | 292,50 | 184,61 | 1 022,89 | 26,55 | 1 526,55 |
| EUR 2,000.00 | 331,97 | 390,00 | 333,61 | 1 276,39 | 35,40 | 2 035,40 |
| EUR 2,500.00 | 86,97 | 487,50 | 482,61 | 1 529,89 | 44,25 | 2 544,25 |
Calculated for a permanent employment contract, accident risk group I, employee not in the extra pension accumulation scheme.
What else goes into the cost of an employee
- Holiday pay. At least 20 working days of holiday a year (on a 5-day week), so it is worth budgeting for this cost in advance.
- The first two days of sick leave. These are paid by the employer.
- Health and safety and medical checks. These depend on the type of work.
- Minimum hourly pay in 2026 – EUR 7.05.
Most common mistakes
- The amount is agreed with the employee as take-home pay, although the employment contract states the gross salary.
- The notice to Sodra before the start of work is forgotten. This can lead to a fine.
- The tax-free allowance is not applied, or applied incorrectly, when the employee has several jobs.
Advice from Ana Baranova, director of Patikima buhalterė: “Before you post a job ad, ask your accountant to calculate the full annual cost of the position, including holiday pay and contributions. It takes 15 minutes and saves you from unpleasant surprises.”
We run payroll from your very first employee
We prepare the employment contract, file notices with Sodra, calculate salaries every month and submit the returns.
Payroll accounting · +370 635 87770
Information valid for 2026. Figures are rounded to the cent and are for information only.
