Employer National Insurance and the Secondary Threshold: What Every Bid Must Include

Most bid models load employer National Insurance as 15 per cent on the wage. That is the rate HMRC prints. It is not the employer NI cost per hour a cleaning contract actually pays. The real figure depends on how many hours each operative works and how the weeks fall and which employer is paying.

This blog is a small research paper. One question. The published data that answers it. The finding. And what it means for the person pricing the next contract. Every figure comes from a named source or is calculated in a numbered table.

Key Findings#

• 15 per cent is the top rate and not the average. Effective employer NI runs from 0.8 per cent of pay at 8 hours a week to 12.0 per cent at 37.5 hours because each operative has a £5000 threshold of their own [1][2].
• The roster moves NI and pension by £18100 a year. Delivering the same 24960 hours with 16 hour operatives instead of 37.5 hour operatives costs £18100 less in NI and pension before about £5300 of extra per head costs [3][4].
• Added hours carry the full rate. Every extra productive hour worked by an existing operative carries £2.14 of NI. That is 43 per cent more than the £1.49 average for a 25 hour operative.
• Short weeks waste the threshold. NI is worked out pay period by pay period. An operative alternating 4 and 28 hour weeks costs 21 per cent more NI than one working a steady 16 [5].
• The Employment Allowance is 3 pence an hour at scale. £10500 covers the NI on about six 25 hour operatives. Employers doing half or more of their work in the public sector cannot claim it [6].

1. The Question#

How much employer NI does a cleaning bid have to carry per hour and which facts about the roster and the pay and the employer change the answer?

The rules are simple to state. Employers pay 15 per cent on earnings above a secondary threshold of £5000 a year or £96 a week [1]. The consequences are not simple. The threshold belongs to each operative and each pay period. So two contracts with the same hours and the same wage can carry very different NI bills.

2. The Data and the Method#

Table 1. Sources used and what each one answers

Every operative is paid the National Living Wage [2] for 52 weeks and works 46.4 weeks after 5.6 weeks of holiday [8]. Costs are divided by productive hours. The roster comparison uses the illustrative contract of 24960 hours a year from the Operify AI series [3]. Per head costs for uniform and training follow the loaded cost paper [9] with DBS at the new fee [10].

3. What the Data Shows#

3.1 Fifteen Per Cent Is the Top Rate Not the Average#

Table 2. Employer NI by weekly hours at the National Living Wage

Calculated at 2026 to 2027 rates. NI is 15 per cent of annual pay above £5000. Productive hours are weekly hours times 46.4.

The effective rate climbs towards 15 per cent but never reaches it. Per productive hour the charge runs from 12 pence to £1.78. A bid that loads a flat 15 per cent on the wage overstates NI on every operative and by most on the short hours that dominate cleaning where 67 per cent of workers in cleaning activities are part time [11]. A bid that loads one average misprices every pattern except the one the average came from.

3.2 The Roster Decides the NI Bill#

Table 3. The same 24960 hours delivered three ways

Calculated. Annual figures rounded to the nearest £100. Operatives needed is 24960 divided by weekly hours times 46.4.

Every operative brings their own £5000 NI threshold and their own £6240 pension lower limit [4]. So the 16 hour roster pays £18100 a year less in NI and pension than the full time roster for exactly the same hours. That is three quarters of the £24000 margin on the illustrative contract.

More operatives bring more per head costs. At the loaded cost paper assumptions of £276 per operative a year the 16 hour roster carries about £5300 more in uniform and vetting and training [9]. It also needs more supervision and more recruitment. The point is not that one pattern is right. It is that the bid has to price the roster the contract will actually run. Price at full time NI and deliver with part timers and the bid is too dear. Price at part time NI and fill the gaps with extra hours and it is too cheap.

One shortcut does not work. Splitting one person into two roles at the same employer does not create a second threshold. HMRC expects earnings from jobs with the same employer to be added together unless that is not reasonably practicable [7].

3.3 Added Hours Carry the Full Rate#

An operative already above the threshold pays NI at 15 per cent on every extra pound. With holiday accrual that is £2.14 on every extra productive hour. The average for a 25 hour operative is £1.49 and for a 16 hour operative £1.13. So extra hours cost 43 per cent and 89 per cent more NI than the average suggests.

Take a variation that adds 10 hours a week to a site and give the hours to existing 25 hour operatives. At the average rate the NI looks like £775 a year. At the marginal rate it is £1111. The bid is £336 short on NI alone before any other on cost.

3.4 Short Weeks Waste the Threshold#

For employees who are not directors NI is worked out on the earnings in each pay period. A weekly paid operative gets a £96 threshold every week whether they use it or not [5]. At £12.71 any week under 7.55 hours leaves part of it unused.

Table 4. Two weekly patterns that both average 16 hours

Calculated on weekly pay periods. NI is 15 per cent of weekly pay above £96. Pattern 4.3 costs 21 per cent or £176 a year more than pattern 4.1.

Variable weeks only cost more when a week drops below the threshold. That is most likely with relief operatives and those on low or zero hours contracts. Their NI belongs in the bid at the rate their actual weeks produce.

3.5 The Employment Allowance Is Small at Scale#

The Employment Allowance takes up to £10500 a year off the employer NI bill [6]. That covers the NI on about six 25 hour operatives or twelve on 16 hours. Spread across a workforce it shrinks fast. At 50 operatives it is worth 18 pence a productive hour. At 300 it is 3 pence. At 1000 it is under a penny.

Two conditions matter for contractors. Only one company in a connected group can claim. And GOV.UK says businesses can claim if they do less than half their work in the public sector such as for local councils and NHS services [6]. A contractor whose book is mostly public sector may not be able to claim it at all.

4. What Every Bid Must Include#

• NI per operative and not per wage bill. Use the weekly hours each operative will work.
• The roster you will actually run. Part time and full time patterns produce NI bills that differ by thousands a year.
• Marginal NI on any added hour. Cover and overtime and variations carry the full 15 per cent.
• The real weekly pattern. Weeks under £96 of pay waste the threshold.
• The allowance at company level only. Never inside a single contract price.
• A check on eligibility. Confirm the public sector condition before relying on the allowance at all.

The NI line feeds the cost per hour worked and that number is only as good as the rostering behind it. A shift pattern with many short contracts carries less NI per hour than one built on full timers. Operatives inherited under TUPE arrive with their hours already fixed so their NI should be priced from the transfer list. Any variation that adds hours should be priced at the marginal rate. In Operify AI the scheduling and roster module checks working time limits as open shifts are claimed so extra hours show up before payroll does.

5. What This Does Not Show#

• Pay is at the wage floor. Higher rates raise every NI figure in proportion above the threshold.
• Reliefs are left out. Under 21s and apprentices under 25 and some veterans have a zero employer rate up to a higher limit.
• The contract is illustrative. 24960 hours a year is a model and not a customer.
• Per head costs are assumptions. Supervision and recruitment for a larger headcount are not costed.
• This is not tax advice. Check eligibility and aggregation with HMRC guidance or a payroll adviser.

6. Conclusion#

Fifteen per cent is the rate on the margin of pay and not the cost of an hour. On a cleaning roster the employer NI cost per hour runs from 12 pence to £1.78 for each productive hour and the roster choice alone moves NI and pension by £18100 a year on a 24960 hour contract.

Every bid needs NI worked out per operative on the real pattern with marginal NI on added hours and the allowance kept out of the contract price. Anything less is a guess dressed up as a percentage.

References#

[1] HMRC. Rates and thresholds for employers 2026 to 2027. Employer rate of 15 per cent above a secondary threshold of £5000 a year or £96 a week or £417 a month. Available at rates and thresholds for employers (accessed October 2026).

[2] UK Government. National Minimum Wage and National Living Wage rates. £12.71 an hour from April 2026. Available at National Living Wage rates (accessed October 2026).

[3] Operify AI. CAI/GR/001/OPI. Losing Money in Plain Sight. Guides and Research series. Self citation. Illustrative contract of 24960 hours a year with a 5 per cent margin of £24000. Model.

[4] The Pensions Regulator. Earnings thresholds 2026 to 2027. Qualifying earnings from £6240 to £50270 with a £10000 trigger and a minimum employer contribution of 3 per cent. Available at Pensions Regulator earnings thresholds and pension contributions guidance (accessed October 2026).

[5] HMRC. CWG2 Employer further guide to PAYE and National Insurance contributions 2026 to 2027. For a weekly pay interval the earnings period is weekly. Available at CWG2 2026 to 2027 (accessed October 2026).

[6] UK Government. Employment Allowance. Up to £10500 a year off employer Class 1 NI. Only one company in a group can claim. Businesses can claim if they do less than half their work in the public sector. Available at Employment Allowance and eligibility (accessed October 2026).

[7] HMRC. National Insurance Manual NIM10002 Aggregation of earnings with the same employer and guidance on employees with more than one job. Available at NIM10002 and employees with more than one job (accessed October 2026).

[8] UK Government. Holiday entitlement. 5.6 weeks of paid holiday a year. Available at holiday entitlement (accessed October 2026).

[9] Operify AI. CAI/GR/003/OPI. The Loaded Cost of an Operative Hour 2026. Guides and Research series. Self citation. Uniform of £120 and training of 8 hours and vetting amortised over nine months which is £276 per operative a year. Calculation.

[10] Disclosure and Barring Service. DBS reduces fees for checks and Update Service from 5 October 2026. Enhanced check £41.00. Available at DBS fee announcement (accessed October 2026).

[11] British Cleaning Council. Research Report 2026. 67 per cent of workers in cleaning activities work part time. Available at British Cleaning Council Research Report 2026 (accessed October 2026).

About Operify AI#

We sell tender costing and rostering software. That is a commercial interest in this finding and readers should weigh it. Two things constrain it. Every rate is published and named so any reader can rerun the arithmetic. Section 5 states what the figures do not show.

Operify AI is operated by Codedevza AI Ltd company number 16485057. Correspondence to hello@operifyai.co.uk.