Cost of employment is the full expense an employer records for employing someone - salary, employer UIF and SDL, retirement and medical contributions, and the cost of any benefits provided. It is the accounting-side counterpart of cost to company, which expresses the same total from the package-design perspective.
What it means
While cost to company is the figure used in offer letters and remuneration structuring, cost of employment is the figure that lands in the general ledger as an expense, posted through the payroll journal each pay run and allocated to the employee's cost centre.
Where it fits in
Cost of employment is what management reporting and budgeting actually track department by department - it is the expense side of the payroll liability the business carries until everything is paid out.
Key rules
- The employer's total expense for an employee, posted to the GL.
- The accounting counterpart of cost to company, same total, different lens.
- Posted through the payroll journal and allocated to a cost centre.
- The figure management reporting tracks at a department level.
