How Much Does It Cost to Hire a Graduate in the UK?

The salary is only part of what a graduate costs you. Employer National Insurance, pension contributions, recruitment fees and the time it takes to get someone productive all add up, and the National Insurance changes of April 2025 widened the gap between salary and total cost.

This guide breaks down every cost for the 2026/27 tax year, works through a full example for a £28,000 graduate role with every calculation shown, and compares agency, job board and GradWorx pricing. For the hiring process itself, read our complete guide to how to hire graduates in the UK.

How much does it cost to hire a graduate in the UK?

For a graduate on £28,000, budget about £32,100 a year for salary, employer National Insurance and the minimum pension, then add recruitment costs of anywhere from nothing to about £5,600. In the worked example below, the full first-year cost comes to £33,727.80 when you hire through a job board and £39,077.80 through a 20% agency fee.

The rates come from HMRC's rates and thresholds for employers 2026 to 2027 and the workplace pension minimums on GOV.UK.

For a sense check across all hiring routes, the CIPD's Resourcing and talent planning report 2026 put the median cost per hire for employees below senior management at £2,000. That figure includes advertising, agency fees, recruitment technology, in-house time and onboarding.

What salary should you budget for a graduate?

Use two benchmarks, with the legal minimum as a floor. The median for UK graduates in full-time work was £30,000 for those who graduated in 2023/24, measured 15 months after graduation in HESA's Graduate Outcomes data, while Institute of Student Employers members, mostly large employers, reported a typical starting salary of £33,000 in 2025.

The floor is the National Living Wage: £12.71 an hour for workers aged 21 and over from 1 April 2026, or £10.85 for those aged 18 to 20. On a 37.5-hour week, £12.71 an hour is £24,784.50 a year (£12.71 × 37.5 × 52).

This guide uses £28,000 as its example: comfortably above the legal floor and a little below the national median. Swap in your own figure; every other cost below scales from it. Our pillar guide covers how to set a graduate salary in more depth, and the UK Graduate Salary Report 2026 goes deeper.

How much employer National Insurance will you pay?

In 2026/27, employers pay Class 1 National Insurance at 15% on each employee's earnings above £5,000 a year (£96 a week or £417 a month). On a £28,000 salary, that is (£28,000 minus £5,000) × 15% = £3,450 a year.

This changed on 6 April 2025. The government's policy paper raised the rate from 13.8% to 15% and cut the threshold from £9,100 to £5,000, where it stays until 5 April 2028. Under the 2024/25 rules, the same £28,000 salary cost (£28,000 minus £9,100) × 13.8% = £2,608.20, so the change adds £841.80 a year to this hire.

Two reliefs can cut the bill sharply:

• Employment Allowance. Eligible employers can take up to £10,500 a year off their employer National Insurance bill in 2026/27. Since April 2025, employers with more than £100,000 of liabilities can also claim. If your total employer National Insurance across all staff is under £10,500, you may pay none at all. Check the eligibility rules: for example, a company whose only employee paid above the threshold is its director cannot claim.
• Employees under 21. The employer rate is 0% on earnings up to £50,270 a year for employees under 21, and for apprentices under 25. A graduate who is still 20 on £28,000 costs you no employer National Insurance at all, a saving of £3,450.

What are the pension costs for a graduate?

You must automatically enrol staff aged 22 to State Pension age who earn £10,000 or more a year, and contribute at least 3% of their qualifying earnings. On a £28,000 salary that is (£28,000 minus £6,240) × 3% = £652.80 a year.

Qualifying earnings are the band between £6,240 and £50,270 a year, and the government kept all the auto-enrolment thresholds unchanged for 2026/27. The minimum total contribution is 8%, of which the employer pays at least 3% and the employee the rest, with tax relief.

Three details that change the number:

• Your scheme's basis. Some schemes calculate contributions on total pay rather than the qualifying band, which costs more. At 3% of the full £28,000, it would be £840.
• Postponement. You can postpone automatic enrolment for up to three months, but you must write to the employee within six weeks. It delays the cost; it does not remove it.
• Graduates under 22. They are not automatically enrolled, but they can ask to join. If they do and earn more than £520 a month, you must contribute the minimum.

Agency vs job board vs GradWorx: what does recruitment cost?

How you recruit is the biggest variable in the whole budget. A typical contingency agency fee costs £4,200 to £5,600 on a £28,000 role, a job board advert costs a few hundred pounds or less, and university careers services are usually free.

Agency fees sit on a scale. Agency Central puts standard contingency fees at 15% to 20% of first-year salary, rising to as much as 30% for hard-to-fill roles, and notes that rebates if a hire leaves early are at the agency's discretion. On a £28,000 role, 25% would be £7,000.

Using GradWorx Attract and Match together costs £1,045 ex VAT, less than a fifth of a 20% agency fee on the same role. Your advert appears on GradWorx Search, our open graduate jobs board, which graduates can browse free without registering. Both products sit in one employer account with no agency commission and no long-term contract, and the full details are on our employer pricing page.

An agency can still earn its fee. If nobody in your business has time to screen applications, or the role needs scarce technical skills, paying someone else to run the process may be the cheaper option overall.

What are the hidden costs of hiring a graduate?

The biggest hidden cost is time: writing the advert, screening, interviewing, then weeks of training before the graduate is fully productive. The rest are smaller but real, and worth listing before you commit.

• Hiring time. Writing the job description, reading applications, a short call, a task, interviews and references. Our graduate job description template cuts the first step to minutes.
• Onboarding and training time. A manager's weekly one-to-one, a buddy's help, and correcting early work. This is the cost most SMEs underestimate.
• Equipment and software. A laptop, licences and any professional subscriptions.
• Insurance. If this is your first employee, you need employers' liability insurance with at least £5 million of cover from day one.
• Sick pay. Statutory Sick Pay is £123.25 a week in 2026/27, or 80% of average weekly earnings if lower, and since 6 April 2026, when the waiting days and lower earnings limit were removed, it is paid from the first day of sickness.
• The cost of a hire who leaves. In the CIPD's 2026 survey, 29% of employers that recruited said new hires at least sometimes joined and then resigned within the first 12 weeks. If that happens, you pay the recruitment and onboarding costs twice.

To price your team's time, multiply the hours by a loaded hourly cost. A manager on £42,000 costs you £48,622.80 a year once you add employer National Insurance (£5,550) and the minimum pension (£1,072.80). Spread over 1,950 paid hours (37.5 hours × 52 weeks), that is about £25 an hour.

Worked example: the first-year cost of a £28,000 graduate

Here is the full calculation for a typical SME graduate hire. The statutory figures are fixed; the time figures are illustrative assumptions you should replace with your own.

Assumptions:

• The graduate is 22 or over, so full employer National Insurance applies and they are automatically enrolled.
• Pension is paid at the 3% minimum on qualifying earnings, with no postponement.
• No Employment Allowance is available (for example, you have already used it on other staff).
• You recruit with a 30-day GradWorx Attract advert.
• Hiring takes 15 hours of staff time and onboarding takes 40 hours in year one, both at £25 an hour.

That is about 20% more than the salary alone (£33,727.80 ÷ £28,000 = 1.205).

The same hire through different routes

Holding everything else equal, the employment cost plus internal time is £33,477.80. Only the recruitment line changes:

An agency would save some of the 15 hiring hours, but not most of them: you still interview and decide.

How the reliefs change it

• With Employment Allowance: if your allowance covers the £3,450 of National Insurance, the Attract route falls to £30,277.80.
• If the graduate is 20: employer National Insurance is £0, and they are not automatically enrolled, so the cost falls by up to £4,102.80 (£3,450 + £652.80) unless they choose to join the pension.
• Per month: salary of £2,333.33, National Insurance of £287.45 and pension of (£2,333.33 minus £520) × 3% = £54.40, so £2,675.18 a month in employment costs.

How can an SME keep the cost of a graduate hire down?

Claim every relief you are entitled to, recruit directly rather than through an agency, and protect the hire once you have made it. Cutting the salary is the worst place to save, because an uncompetitive offer costs you the best candidates.

1. Claim Employment Allowance. At up to £10,500 a year, it covers the employer National Insurance on three graduates on £28,000 (3 × £3,450 = £10,350) if you have no other liabilities.
2. Advertise directly. University careers services, your own network and a graduate job board will reach most candidates for a fraction of an agency fee.
3. Start with a paid internship. A summer intern costs far less than a bad permanent hire, and lets you test the role. Our guide to intern pay and the minimum wage covers what you must pay.
4. Consider an apprentice. From 1 August 2026, employers that do not pay the Apprenticeship Levy pay nothing towards training for apprentices aged 16 to 24 at the start, according to the DfE's apprenticeship funding guide, and employer National Insurance is 0% up to £50,270 for apprentices under 25. See apprenticeships for SMEs.
5. Keep them. Every graduate who leaves in year one means paying the recruitment and onboarding costs again. A clear 90-day plan and visible progression are the cheapest retention tools you have; the hiring guide sets them out.