People and rotas
True hourly cost of an employee: from gross pay to actual cost
Gross pay is never the real hourly cost: contributions, non-productive hours and overtime are missing.
Klyra Editorial · Published on 20 January 2026 · 8 min read
Many venues plan shifts by looking only at the gross hourly wage agreed with the person. That's a mistake that systematically understates staffing costs, because that figure is only the starting point of a broader calculation.
The contributions coefficient: variable, not fixed
On top of gross pay, employer contributions, provisions and other charges are added. This coefficient changes by country, contract type, and sometimes income bracket: there is no universal multiplier that applies everywhere. The correct approach is to have your payroll advisor or accountant calculate the real coefficient, and use it as the basis for every simulation.
Non-productive hours count too
The real hourly cost doesn't stop at contributions. You also need to factor in hours that are paid but not dedicated to service: training, meetings, opening/closing time without customer contact, paid leave. If you ignore these hours in the calculation, the cost per cover served will look systematically lower than it really is.
- Training and onboarding hours for new hires
- Department or shift meetings
- Administrative time (inventory, orders, till closing)
- Paid leave and sick pay, where applicable
Overtime: the hidden multiplier
Overtime doesn't just add to the total paid hours: it often carries a specific hourly premium, which must be included in the actual cost calculation, not treated as an exception to ignore at month-end. If overtime recurs every week on the same people, the problem is in how shifts are distributed, not an unforeseen event.
The indicator that really matters: revenue share
The hourly cost in absolute terms says little unless you compare it with what that hour produces. The useful indicator is labor cost as a percentage of revenue, calculated per service slot: it tells you whether an expensive hour is still a profitable one, or whether it's eroding margin.
- Calculate the real hourly cost (gross + contributions + share of non-productive hours)
- Add up overtime for the observed period
- Divide the total by net revenue for the same period
- Compare the result by time slot, not just for the whole day
FAQ
Is the contributions coefficient the same for every contract?
No, it changes based on contract type and country. It should be calculated with your payroll advisor, not applied as a standard percentage.
Why include non-productive hours in the calculation?
Because they are paid hours: if you exclude them, the cost per cover or per service hour looks artificially low and planning decisions suffer as a result.
What's a good benchmark for revenue share?
It depends heavily on the venue format and the country. The most reliable benchmark is your own history over comparable periods, not a generic industry average.
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