How it's calculated
An employee's total cost (Arbeitgeberkosten) is the gross salary plus the employer's own contributions. These are never deducted from the employee's pay.
- Employer social insurance. The employer pays half of pension insurance (18.6% in total), half of unemployment insurance (2.6%) and half of health insurance (14.6% plus the fund's add-on, on average 2.9%). It also pays half of the 3.6% long-term care rate. In Saxony employees bear 1% of the care contribution alone and only the rest is split, so the employer pays less there. The childless surcharge and the child discounts on care insurance concern only the employee.Deutsche Rentenversicherung Knappschaft-Bahn-See
- Levies (Umlagen). U1 refunds sick pay and applies to employers with up to 30 employees. U2 refunds maternity pay. U3, the insolvency levy, is 0.15% by law. U1 and U2 rates are set by each health insurance fund. The defaults are KNAPPSCHAFT's 2026 rates of 0.8% and 0.22%.Gesetze im Internet
The formula
Per month, with gross = annual salary ÷ 12:
- Pension and unemployment (employer) = (rate ÷ 2) × min(gross, €8,450).
- Health (employer) = ((14.6% + add-on) ÷ 2) × min(gross, €5,812.50).
- Care (employer) = 3.6% ÷ 2 × min(gross, the health ceiling); in Saxony (3.6% − 1%) ÷ 2.
- Levies = (U1 + U2 + U3) × min(gross, the pension ceiling). The levies are charged on the pay on which pension contributions are measured (§ 7 (2) AAG, § 358 (2) SGB III).
- Total cost = gross + employer social insurance + levies. Each item is rounded to the cent, and the year is 12 × the month.
Worked example
An employee in Berlin on €60,000 a year, at a company with up to 30 employees:
| Line | Year | Month |
|---|---|---|
| Gross salary | €60,000.00 | €5,000.00 |
| Pension insurance (employer half) | €5,580.00 | €465.00 |
| Unemployment insurance (employer half) | €780.00 | €65.00 |
| Health insurance (employer half) | €5,250.00 | €437.50 |
| Long-term care insurance (employer half) | €1,080.00 | €90.00 |
| U1 sick-pay levy (0.8%) | €480.00 | €40.00 |
| U2 maternity levy (0.22%) | €132.00 | €11.00 |
| U3 insolvency levy (0.15%) | €90.00 | €7.50 |
| Total employer cost | €73,392.00 | €6,116.00 |
The employer's total cost is €73,392 a year. On €120,000, above both ceilings, it is €139,293: the on-cost falls to 16.1% of gross pay.
Assumptions and limitations
- Regular employment above the Midijob range. The calculator starts above €2,000 a month. In the Midijob transition range the employer's share follows a different formula, and Minijobs have their own flat rates (see the Minijob calculator).
- Not included: statutory accident insurance, which is billed separately by the employer's liability insurance association. Also left out: employer pension contributions, benefits in kind, the artists' social levy (Künstlersozialabgabe) and holiday or Christmas bonuses paid separately.
- Statutory health insurance. For employees with private health insurance the employer pays a subsidy instead, which is not modelled.