Salary Is Not Employment Cost: Comparing Budget Structures Across Seven Operating Markets

Employment cost in seven markets: work from cost buckets first

When hiring a first employee in Malaysia, Singapore, Hong Kong, the United Kingdom, Canada, the United States or mainland China, the approval should cover the full-year operating cost rather than the monthly salary on the offer. Salary is only the first layer; statutory contributions, insurance, paid non-working time, recruitment, equipment, visas, payroll processing, compliance and currency costs may be borne by different parties in different months.

The method is clear: use the same cost buckets in all seven markets, but calculate in the local currency. Do not convert renminbi, Hong Kong dollars, pounds, Canadian dollars, US dollars, Singapore dollars and ringgit into one currency and rank them for cheapest. Status, age, ceilings, industry, place of work and exchange rates all change the result.

Facts were checked as at 24 August 2026. Where a pay figure below is labelled a worked example, it exists only to demonstrate the formula. It is not a market salary survey, a quote or a hiring commitment.

1. Build one recalculable cost bridge first

Write the annual employer budget as a bridge, not a percentage:

Annual employer budget = fixed cash salary + bonus and allowances + employer statutory contributions and taxes + insurance and work injury + paid non-working time + statutory benefits + payroll or EOR + recruitment and onboarding + equipment and office + visas and relocation + compliance management + currency and contingency.

Keep these twelve lines fixed in the working paper, each with amount, calculation basis, payment frequency, source or quote, and whether tax is included:

1. Fixed cash salary: monthly pay, hourly pay, guaranteed thirteenth month or fixed allowances, normalised to an annual local-currency amount.
2. Bonus and variable pay: target bonus, commission, overtime, meal and transport allowances, marked for whether they enter a statutory base.
3. Employer statutory contributions and taxes: retirement, social insurance, unemployment, payroll tax, training levies and local payroll taxes, counting only the employer's additional share.
4. Insurance and work injury: statutory work injury, liability, medical and group accident cover kept separate, quoted by industry, role, headcount, claims history and insured amount.
5. Paid non-working time: annual leave, public holidays, sick leave and maternity leave that continue to be paid, plus replacement cover and delayed delivery.
6. Statutory benefits: retirement accounts, medical, severance or long service, statutory bonuses and training, which do not disappear because payment is not monthly.
7. Payroll or EOR: payroll processing, year-end, payment platforms, EOR management fees and minimum monthly charges; not to be mistaken for a statutory rate.
8. Recruitment and onboarding: advertising, search fees, screening, medical checks, training and the cost of re-hiring after a failed hire.
9. Equipment and office: computers, software, office space, network, travel, home-office allowances and depreciation.
10. Visas and relocation: work permits, government fees, agents, flights, relocation, accommodation, dependants and renewals; local employees can be entered as zero.
11. Compliance management: employer registration, contracts, payroll records, statutory filings, accounting and professional review. This is management cost, not employee net pay.
12. Currency and contingency: after calculating in local currency, add an adjustable currency buffer in the payment currency; the percentage is a company risk assumption, not an official rate.

Employee income tax, retirement or insurance shares are usually funds the employer withholds, and should not be counted as cost a second time. Under-withholding, late payment, tax equalisation, a net-pay promise or employer-borne employee costs become additional cost and compliance risk. When you see "salary × a fixed percentage", check the base, the ceiling and the employee's status first.

2. Lock the working paper before checking local rules

The seven markets can share one working paper, but not one set of rates. For each employee, fill in first:

• the work market, the actual work city or province or state, the contracting entity, whether the role is remote and whether it sits on local payroll;
• local employee, permanent resident, foreign employee, work permit category and days worked locally;
• age, length of service, start and departure months, monthly pay, bonus, allowances, overtime and one-off payments;
• the definition of cash salary, the statutory contribution wage base, annual ceilings, minimum thresholds, bands and rounding rules;
• employer benefit policy, insurance quotes, office arrangements, recruitment channels, EOR or payroll service fees;
• budget currency, payment currency, exchange rate assumptions, contingency rules and the monthly cash-flow peak.

The general form of the statutory bucket is:

Statutory bucket = each (applicable wage base × local rate), then apply the age, status, wage ceiling, band, minimum amount, annual accumulation and rounding rules.

Do not force a global percentage onto paid non-working time. Start by estimating annual guaranteed cash salary ÷ expected working days × paid non-working days, then list public holiday clashes, sick leave, replacement cover and vacancies. For a monthly-salaried employee, holiday pay is usually already inside fixed cash salary, so the incremental cost is mostly cover and productivity; hourly or irregular hours may have a different base.

The table should keep three layers of result: statutory amounts already calculated from official rules, commercial amounts already confirmed by a supplier quote, and inputs still awaiting review by a professional or a local payroll calculator. The three layers must not be merged into one "accurate total".

3. How the cost structure changes across the seven markets

Malaysia: EPF, PERKESO and Peninsular labour law are not one percentage

The easiest Malaysian error is treating EPF, SOCSO and EIS as one payroll percentage. KWSP's employer page requires contributions under the wage bands and applicable status in the Third Schedule to the EPF Act 1991; Malaysian citizens, permanent residents, non-Malaysian citizens, age groups and wage bands all change the employer share. From the October 2025 wage period, qualifying non-Malaysian citizens are generally handled under an EPF rule of 2% employer and 2% employee, but permanent residents and historic member categories cannot be covered by that one sentence. Wages below MYR 20,000 should also follow the official wage band table rather than being turned into a continuous percentage by hand. The reference point is the KWSP explanation of mandatory employer contributions.

PERKESO has its own accident, invalidity and employment insurance rules; the website explains that the wage ceiling was adjusted to MYR 6,000 a month from October 2024, and wages above the ceiling cannot simply continue to be calculated linearly on the full amount. Protection and contributions for foreign employees follow separate rules, and the employer and employee shares cannot be derived from the EPF table. Take figures from PERKESO Contribution Rate and look up the applicable schedule by employee status.

Paid leave, sick leave, public holidays and working hours have to be checked against the applicable version of the employment law, the employee's coverage and the place of work. The JTKSM Employment Act 1955 text cited here is the official statutory text for Peninsular Malaysia; where the role is actually in Sabah or Sarawak, the Peninsular table is not the local rule. The budget paper needs at least five switches: citizen or foreign, age, place of work, wage band, and insurance and work permit.

Singapore: CPF status and age are large buckets, and foreign employees also carry SDL and levy

Singapore's fixed statutory cost is a good example, provided the status is locked down. The 2026 CPF tables show an employer CPF rate of 17% for Singapore citizens and permanent residents from the third year, aged 55 or under, with monthly wages above SGD 750; above 55 the rate steps down by age band to 16%, 12.5%, 9% and 7.5%. First and second year permanent residents have a separate graduated table, and the monthly wage bands and ordinary and additional wage ceilings have to be checked separately. Do not write 17% as "the Singapore tax" for every employee. See CPF 2026 employer contributions and calculation steps.

SDL is another employer-borne training levy that applies to employees working in Singapore, including foreign employees; CPF Board's SDL page sets out 0.25% of monthly wages, with a minimum of SGD 2 and a maximum of SGD 11.25 per employee, and rounding on the total across all employees at the end. It cannot be merged with CPF into one social insurance rate.

Employing Work Permit or S Pass staff also means bringing sector quotas, worker skills, local employee counting and the monthly foreign worker levy into the budget; MOM's quota and levy explanation makes clear that the levy is paid by the employer and that rules differ by sector and skill tier. Work passes, medical insurance, accommodation, renewals and employment costs that cannot be passed to the employee belong on the visas and relocation or statutory benefits lines, not inside employee net pay.

Hong Kong: MPF has a ceiling, and work injury insurance is not optional

Hong Kong's MPF calculation logic is more concentrated than many markets, but it still cannot be reduced to monthly salary alone. MPFA's current explanation works in tiers on relevant income and its lower and upper limits: where monthly pay is below HKD 7,100 the employer still contributes 5% of relevant income and the employee contributes nothing; between HKD 7,100 and 30,000 both sides contribute 5%; and above HKD 30,000 the mandatory share for each side is capped at HKD 1,500 a month. Relevant income also includes monetary payments such as wages, holiday pay, commission, bonus and allowances, so the budget has to decide which payments enter the base first. See MPFA mandatory contribution rules for employees.

Statutory holidays, continuous contracts, annual leave, sick leave, maternity leave and termination payments under the Employment Ordinance belong on the paid non-working time and statutory benefits lines, not in a simple MPF multiplier. From 2026 the statutory holiday list adds Easter Monday, and holiday pay after meeting the continuous contract conditions, the annual leave ladder and average wage calculations should all be checked against the Labour Department Employment Ordinance Q&A. Statutory holidays and bank holidays are not the same budget concept, and shift-based businesses also need to plan for substitute holidays or additional pay.

Work injury risk has a hard threshold too. The Hong Kong Labour Department states that an employer must hold valid insurance covering both Employees' Compensation Ordinance liability and common law liability; premiums and underwriting under the Employees' Compensation Ordinance have to be quoted by insurers according to headcount, industry, role and insured amount. Do not delete insurance, medical and employee compensation from the budget just because MPF has a ceiling.

United Kingdom: NI, pensions and holiday are three different calculation lines

Employer National Insurance for the 2026/27 UK tax year cannot be calculated by multiplying monthly salary by a single UK rate. HMRC's rates and thresholds for employers 2026 to 2027 state that ordinary Category A employer secondary NI is 15% of pay above the annual £5,000 threshold; categories such as under-21s, apprentices under 25, veterans, Freeport and Investment Zone have different zero-rate thresholds. Employer eligibility items such as the Employment Allowance also change cash flow, and cannot be assumed available in a single-person example.

Automatic-enrolment pension is usually calculated on a qualifying earnings band. GOV.UK's workplace pension contributions uses the annual £6,240 to £50,270 qualifying earnings range as the common basis, with a minimum employer share of 3%, though a specific scheme may be higher. Whether bonus, commission and overtime enter scheme pay has to be reviewed against the scheme and the payroll set-up.

Holiday, meanwhile, is a productivity and replacement budget. GOV.UK's holiday entitlement states that most workers get 5.6 weeks of paid annual leave a year, usually 28 days for a five-day week, and that an employer can include bank holidays within those 5.6 weeks. Fixed salary usually does not increase while a monthly-salaried employee is on leave, but role cover, delayed delivery, temporary staff and holiday pay calculations do add budget. Employment law, public sector arrangements and industry terms across the four UK nations still have to be checked against the actual place of work.

Canada: national CPP and EI are only the start; province, territory and remote-work facts decide the next layer

Canada can start with national CPP and EI on a shared working paper, then list provincial programmes separately. For 2026, the CPP basic and first additional portions are 5.95% each for employee and employer, with an annual basic exemption of CAD 3,500 and a first ceiling of CAD 74,600; there is a second additional CPP between CAD 74,600 and CAD 85,000, with an employer share of 4% and a maximum of CAD 416. The official Canada Pension Plan contributions also notes that the actual calculation follows annual accumulation and stops at the ceiling.

The 2026 EI maximum insurable earnings is CAD 68,900; the maximum annual employer premium outside Quebec is CAD 1,572.30, while Quebec has different rates and ceilings because it runs its own parental insurance scheme. Check against the 2026 EI maximum insurable earnings notice and the local payroll calculator rather than adding the employee EI deduction a second time.

Provincial health taxes, workers' compensation, minimum employment standards, paid leave, employer benefits and payroll registration can all differ. For remote employees, CRA's Determine the province of employment requires the province of employment to be determined from where the employee actually reports, the employer's establishment and the facts of the remote agreement, and makes clear that a province cannot simply be chosen to avoid a particular withholding regime. POE mainly settles withholding and CPP/EI/QPIP; it does not automatically replace employment law, work injury insurance, permanent establishment or company registration judgements. Three employees in Toronto, Vancouver and Montreal cannot be copied from one national rate line.

United States: federal tax can be calculated first, but state and city costs cannot be omitted

US federal employment tax can produce a recalculable first layer. IRS Publication 15 (2026) states that in 2026 employer Social Security is 6.2% of wages up to a wage base of USD 184,500; employer Medicare is 1.45% with no wage ceiling; and the nominal FUTA rate is 6% on only the first USD 7,000 of wages per employee for the year, usually subject to state unemployment contributions and the available credit. FUTA is not an employee withholding item and cannot be recovered from employee wages.

Once the federal part is calculated, the state, city and industry switches have to be opened. State unemployment wage bases, employer experience rates, local payroll taxes, the way work injury cover is bought, medical insurance, paid sick leave and family leave may all be completely different. The US Department of Labor State Workers' Compensation Officials lists the work injury authority for each state and territory, which is itself the reference point showing there is no single national work injury rate.

Paid non-working time has no single federal answer either. DOL Vacation Leave makes clear that the FLSA does not require private employers to pay for vacation, sick leave or federal holidays, which are usually decided by the employment agreement, state law, local ordinance or benefit policy. A US budget therefore cannot import the UK's 5.6 weeks, Hong Kong's statutory holidays or China's annual leave ratio directly; model it by the state of work and the employee handbook.

Mainland China: social insurance and housing fund both depend on city, base and policy year

Mainland China is the market least suited to a single national percentage table. National policy can provide the underlying framework, but the contribution base lower and upper limits for pension, medical, unemployment, work injury and maternity insurance, the medical and unemployment rates, industry work injury rates, the collecting authority and the annual adjustment all have to be checked against the employee's actual work city and the notice for that year. The comprehensive plan for reducing social insurance rates published by the human resources authority once reduced the enterprise employee basic pension unit rate to 16% in regions where it was higher, and required each locality to set base limits from the average wage of urban unit employees on a full-calibre basis; it did not fix every other insurance type in every city at 16%.

Housing provident fund should be listed separately rather than squeezed into social insurance. The official text of the Regulations on the Administration of Housing Provident Funds provides that the contribution ratio for units and employees should in principle be no lower than 5%, and that cities with the capacity may raise it, with the contribution base and ratio implemented through local management rules and annual announcements. Beijing, Shanghai, Shenzhen, Guangzhou and other cities can differ on base ceilings, the link to the minimum wage, back contributions, cross-region transfers and the unit ratio chosen; this article does not treat 5% or 12% as the current quote for any one city.

Paid annual leave, statutory holidays, sick leave, maternity leave, overtime and economic compensation also belong on the local employment law review list. Wages, social insurance, housing fund, benefits and work injury spending may be borne by different accounts in the books, but the budget owner should look only at the complete economic cost of the same employee. For foreign employees, add work permits, residence, medical examinations, translation, relocation, tax residency and cross-border payment review.

4. Three scenario budgets: one formula, three operating facts

Scenario A: a local employee, remote or asset-light office

Suited to validating a role first without presupposing an office, a visa and expensive benefits. The order in the working paper is: fixed salary and bonus → local statutory contributions and taxes → insurance and work injury → paid non-working time and replacement → payroll fees → equipment and software → recruitment → compliance management → currency contingency. Enter zero on the office, relocation and EOR lines, but do not delete medical, work injury, retirement and statutory holiday lines.

Scenario B: a local employee, an office and full benefits

Add a desk, software, network, travel, group medical, group accident, training, transport or meals on top of Scenario A, and build a separate line for cover when the office is closed, it is a public holiday or the employee is on leave. Do not apply one global percentage to benefits; use insurance quotes for the same role, the company benefit policy and the actual number of people using them as inputs. If an employee's bonus, allowances or shares enter a statutory base, confirm that in the payroll rules before it enters the contribution formula.

Scenario C: a foreign employee, relocation or an EOR transition

On top of Scenario B, add work permits, visas, government fees, agent or lawyer fees, translation, flights, relocation, temporary accommodation, dependants, renewals, foreign medical insurance and tax review. Where an EOR is used first, list the EOR monthly fee, minimum charge, exchange rate, local benefits and exit fee separately; where it converts to a local entity, add employer registration, accounting, year-end and ongoing compliance. Do not treat "the employee is willing to bear it" as a budget reduction; some markets expressly prohibit passing a levy or employment cost on to the employee.

Three transparent worked examples: local currency only, no merged ranking

• Singapore example: assume a Singapore citizen aged under 55 on SGD 6,000 a month with no bonus all year. Under the current CPF tables, employer CPF is 6,000 × 17% = SGD 1,020; SDL is 6,000 × 0.25% = SGD 15, but capped at SGD 11.25 per person, so the statutory subtotal is SGD 1,031.25. Annual leave, medical, work injury, recruitment, equipment, payroll and contingency are not yet included; this is not the market's total cost.
• United Kingdom example: assume an ordinary Category A employee on £60,000 a year for 2026/27, disregarding the Employment Allowance. Employer NI = (£60,000 − £5,000) × 15% = £8,250; with the pension shown on the common qualifying earnings range, the minimum employer share = (£50,270 − £6,240) × 3% = £1,320.90; the two subtotal to £9,570.90. Holiday pay is usually already inside fixed annual salary, while replacement cover and extra benefits still have to be listed separately.
• United States example: assume an annual salary of USD 72,000 with state and city items excluded first. Social Security = 72,000 × 6.2% = USD 4,464; Medicare = 72,000 × 1.45% = USD 1,044; nominal FUTA = 7,000 × 6% = USD 420. Where the 5.4% state tax credit is met, FUTA may fall to USD 42, so the federal subtotal sits between USD 5,550 and USD 5,928, before state unemployment, work injury, medical, paid leave, recruitment and office costs are added.

Local rates change with bands, status, age, and state, provincial or city annual bases; the examples explain the formula, they are not a quote.

5. Turn the seven-market comparison into an approval sequence

Before submitting a first-employee budget, lock it down in this order rather than asking which country is cheapest:

1. Lock the employee's actual place of work and the contracting entity first. The place of incorporation, the place of receipt, the boss's location and the employee's place of work may not be the same.
2. Then lock status, age, work permit and length of service. Singapore CPF, Malaysian EPF, Hong Kong MPF and benefit eligibility elsewhere can all change because of it.
3. Normalise the pay basis. Split monthly pay, bonus, allowances, commission, overtime and equity payments, and mark which enter a statutory base.
4. Calculate each official statutory bucket. For every rate, record the source, base, ceiling, capping month, band, payment date and rounding method.
5. Then obtain commercial quotes. Insurance, EOR, recruitment, office, equipment, medical and visas are quote or company policy inputs, not to be disguised as official percentages.
6. Convert paid non-working time into cash and delivery impact. Write down at least the assumptions for public holidays, annual leave, sick leave, replacement, vacancy and training.
7. Add currency and contingency last. Keep the local-currency table as the original, then build a sensitivity analysis in the actual payment currency, for example a rise in the exchange rate, a delayed start, a bonus being earned or an insurance renewal repricing.

If the company has not yet decided where to incorporate, it can read the Malaysia company registration guide, Singapore company registration guide, Hong Kong company registration guide, UK company registration guide, Canada company registration guide, US company registration guide and China company registration guide, but registration coordination cannot replace local payroll, tax, employment law, insurance or visa advice.

6. The six most common budgeting errors

• Using an employee's net take-home pay as the budget. Net pay is affected by the employee's personal tax and withholding, and the employer should start from contractual gross cash.
• Adding both the employee share and the employer share to cost. Withheld funds belong in the cash-flow line but cannot be counted a second time as employer cost.
• Carrying one market's standard rate to another status. Age, years of permanent residence, a foreign work permit, wage ceilings and industry classification can all send the same role down different rules.
• Counting only monthly contributions and not one-off and ongoing costs. Build recruitment, equipment, visas, renewals, year-end, insurance and exit costs into the cash flow by the month they fall due.
• Using the head office city to represent a remote employee's location. US states, Canadian provinces, Chinese cities and Peninsular versus East Malaysia all require a return to the actual working facts.
• Using currency conversion to manufacture a precise ranking. Exchange rates, benefit policy, role productivity and replacement cost are not the same dimension; cross-currency figures can only support scenario analysis, not a general conclusion.

7. Conclusion: model one person and one market first, then decide the entity and the employment route

An approvable overseas employee budget should answer four sentences: where does this employee work? Which entity signs and pays? Which statutory amounts already have an official basis? Which commercial costs are still waiting for a supplier quote or professional review? If those four cannot be answered clearly, comparing salary figures further will not improve the decision.

MANPRPOWER LIMITED can assist with company registration coordination, document preparation and support from qualified partner agencies, and can help organise the document list and consultation entry points for market entry. It does not provide unauthorised legal, tax, employment, insurance or visa advice, and does not guarantee company registration, work permits, salary cost or compliance outcomes. To discuss a market's entity choice, employee status and budget questions separately, set out the actual place of work, role, status and expected headcount through contact us or Telegram, and a person will then judge which type of specialist should review the next step.