Employer Social Charges September 2025

I am often surprised at how little attention potential clients pay to the Employer social security costs.

Clients, and especially payroll or Employer of Record (EOR) providers (who make a very thin margins) invariably press me on FEES. Fair enough: although I joke if we gave the service free some firms would still ask for a discount!
But these firms seem to display little interest in Employer Social Charges which are often colossal and far more important than the fees: 46% of gross remuneration in France, 39% in Italy, 33% in Vietnam, 30% in Colombia, 26% in Algeria.  Clients assume that the social charges quoted are mandatory and accurate. But this is not always the case. The costs actually charged can vary substantially.

1.      In many countries the Employer social security cost is “capped” at a certain maximum salary or at a certain figure for the social security payments. For instance, in Vietnam the social charges are 33% of gross remuneration capped at 20 times the average wage. More simply in Turkey the limit for payments is TRY195,041per month (about US4750). But some providers of EOR services charge a standard % for employer social charges and pay no attention to the salary limits. For instance, USA FICA,FUTA, and SUTA costs are capped at various levels but a provider of Employer of Record service there cheerfully told me that his company ignores these limits and charges the routine % on the full salaries.

2.      Even where there are no salary limits as in France, the social security charged can vary. I normally quote “46%” but the EOR provider we use for France manages to sometimes get this down to 43-44%. 2% of French salaries can be serious money.

3.      Also, some providers of EOR services throw in company costs and claim they are “social charges”: things like audit costs, professional liability insurance, employer’s liability insurance and so on. One of my colleagues said this was like “charging clients for keeping the lights on”.

4.      Some providers of service charge a % for potential end of service payments/severance pay. Fair enough, it is important to have something in the accounts to offset the costs. But these costs should be seen as a PROVISION and if the employee leaves in circumstances where no severance pay is needed the provision should be returned to the client.

5.      And there is sometimes real expertise involved. Our partner for payroll administration in Italy advised a client that the Collective Agreement they were under was simply wrong. The new Collective Agreement reduced the Employer social charges by 1%. This saving multiplied by 20 or so staff was far higher than the entire payroll administration cost...

Le Cheminant International produces a spreadsheet of social charges in 150 or so countries. We send it out free. We don’t guarantee that it is always 101% up to date as governments can change social charges whenever they feel like, but it is useful for budgeting and inter country comparisons.

John.tinsley@lecheminantinternational.com