Freelancers? No thank you! They are too expensive for our business!

"Freelancers? No thank you! They're too expensive for our business!"

Not surprisingly, we do hear this response several times a day. What usually follows is a yes-no discussion in which our clients do not always listen to our arguments. It's a shame, because an incredible amount of talent, time and expertise is lost this way.

In this blog, we would like to put an end to this discussion once and for all. Because even if it only gets us a handful of extra freelancers working, we should still try it for their sake! And admittedly, also for our own account managers ... who have to make the same argument every day.

Above all, let's look at the concrete, hard numbers. Because, let's face it, those often capture the imagination the most.

Let the numbers do the talking

We put 3 different contract types side by side in the table below: a permanent employee, a temporary employee and a freelancer. To make it easy, in the table below we have reduced everything to cost per hour. Taking into account 255 working days (in 2023) and 8 working hours per day.

We start by noting the "base hourly wage." This is the biggest cause of our "discussions" we have because employers often only look at this for comparison purposes.

Hourly wages often vary between 50€ and 90€ per hour. A big difference of course, but just as senior employees in your company will be paid more expensively, so will senior freelancers. So let's mainly compare apples to apples. Here we take an executive administrative assistant with limited experience as an example.

Next, we list a series of costs that will sound very obvious to you, the employer: dimona costs, travel expenses, meal vouchers, company car, eco vouchers, hospitalization insurance, group insurance, public holiday costs, work accident insurance, vacation pay, year-end bonus, all kinds of expenses and illness. Again, we have provided very accurate information each time.

Ready to spice up the exciting world of HR costs? Here we go, numbers are about to get a lot more appealing!

Explanation

• The Talent Attraction Tango: Think of the cost-per-hire as the dance of attracting brilliant new talent. It is no ordinary move; it is a sophisticated routine that encompasses the art of drafting job postings, sifting through the sea of resumes, orchestrating interviews, and the delicate dance of salary negotiations. The entrance fee for this show averages a cool €4500 per year, spread out over a precisely calculated schedule to ensure that you invest wisely in the future stars of your team. In other words, cost-per-hire is linked to recruiting talent and refers to the total cost of attracting the new employee to the company, including the expenses of the recruiting process, cost to write out vaca, screen resumes, arrange interviews, take references, schedule and follow up on job interviews, salary reviews,... equipment, travel expenses, administrative costs and benefits. How do you calculate a cost-per-hire? Average cost per hire in Belgium in 2023 is estimated at €4500 per year / 2.5 (depreciation cost per hire) / 12 months per year / 20 working days per month / 7.6 hours per day. *1
• Dimona: The Quick Step of Compliance: Dimona is more than a formality; it is the quick step that every Belgian employer must master. Dimona stands for "Déclaration Immédiate/ Immediate Declaration" and is a system in Belgium used by employers to electronically declare the entry and exit of employees immediately to social security authorities. This system allows the NSSO (National Social Security Office) to quickly and efficiently collect the necessary information about employees' employment history. The purpose of Dimona is to maintain an accurate and up-to-date database of employment in Belgium, which helps in the management of social contributions and workers' rights. By using Dimona, employers can fulfill their legal obligations and employees can receive their social rights (such as unemployment benefits, pensions, etc.) correctly and in a timely manner. There is no direct "cost" associated with filing a Dimona return in the same way that there are costs associated with products or services. However, managing personnel administration, including filing Dimona returns, requires time and resources from the HR department or the person responsible for human resources within a company. This administrative burden may involve indirect costs, such as the salary of the employees who perform these tasks or the cost of using software that automates and simplifies the process. This cost is estimated at 0.5€/hour per employee.
• In addition to gross wages, you pay social security amounts (employer contributions) to the National Social Security Office (NSSO). These are contributions you pay as an employer to Social Security to contribute to the supplementary pension for your employees. The employer contribution or patron contribution is 25% of gross wages.
• An electric company car costs an average of 685€ per month for the employer (incl lease price, deductible, fire stop). This is the amount for a car category Audi A1.
  The average cost of an electric company car for a business can vary depending on several factors, including the make and model of the car, the method of purchase (buying, leasing, or financing), subsidies or tax breaks that may apply, and usage (such as mileage driven).
• In some countries, the government offers subsidies or tax breaks for electric vehicles to encourage sustainable transportation. This can significantly affect the total cost of ownership (TCO). The TCO includes the purchase price, depreciation, insurance, maintenance, repairs, and the cost of electricity to charge the car. Leasing electric vehicles is also a popular option for businesses because it often includes maintenance and repairs, making operational costs more predictable. The monthly lease price can vary depending on the lease terms, the term of the lease, and the model chosen.
  Convert to an hourly rate as follows: 685€ / 4 weeks per month / 38 hours per week.
  At GIGHOUSE, we find that in 95% of all cases freelancers work with a rate all-in. This means that a relocation fee is usually included in the fixed hourly rate. Only in limited cases is an additional relocation fee agreed upon with the client.
  The cost of the company car an sich is, of course, in quasi all cases at the freelancer's own expense.
• Eco-checks: 250€ per year. A service coefficient of 3.5% needs to be added via temporary employment. This service coefficient refers to the administrative cost that the temporary employment companies charge for the effective processing of the eco-vouchers.
• Hospitalization insurance: many companies today include hospitalization insurance in their standard pay package. The average cost is 9.72€ per month. Conversion to hourly rate in the table above is as follows: 9.72€ / 4 weeks / 38h.
• An average group insurance is 75€ per month (+4.4% tax and NSSO contribution of 8.8%). The calculation in the table above goes as follows : 75€ + 4% tax + 8.8% NSSO contribution)/4 weeks per month /38h per week.
• Public holidays: there are 11 public holidays per year (this is 0.91 public holidays per month). According to the agency system, a coefficient should be added to this. This calculation is worked out as follows: ((hourly wage + cost) * average 7.6h per day *0.91) / 4 weeks / 38h
• Workplace accident insurance: A work-related accident costs an employer an average of €10,000 to €20,000. In some cases, it can even reach several million euros. Of course, this depends on the size of the organization and the nature of the work. The average cost at a temporary employment agency in Belgium is estimated at €250 for the declaration and €6400 average cost per accident.
• Vacation days should be included in the employee's cost. This cost is calculated on the basis of 20 vacation days per year.
  Calculating the cost of vacation days in the table above: (hourly wage + cost * 7.6 hours * 20 days) / 12 months / 4 weeks / 38 hours.
• End-of-year bonus = ((wage + cost) * 38 days * 4 weeks *0.92) / 12 months /4 weeks/38 hours
• Expenses: an average of 150€ per month of expenses is provided (150/4/38). Do not exceed the maximum amounts per year and per day. The maximum amounts are indexed annually. In 2024, the ceiling of the expense allowance is 41.48€ per day and 1659.29€ per year.
• Sickness: 2021 figures show an average of 7.4 sick days per 100 days worked. On 220 working days per year, this amounts to an average of 16.28 days. In temporary employment, sickness is often borne by the client and is no longer included inclusively in the cost price. So this needs to be added on top.

So when you take all the previous information into account you see a fairly small difference in total hourly rate between the 3 different contract types. Above all, it teaches us that we must therefore always compare apples to apples and that "nothing is what it seems at first glance" 😉.

That flexible forms of employment will always be slightly more expensive than your permanent employee, we're not going to argue about that. Above all, remember here that flexibility and expertise also always comes with a certain (additional) cost. But isn't that empty chair also costing you an awful lot of money today?

And ... if you pay peanuts ... you get monkeys? 😉 With freelancers, you bring in experts who are entrepreneurs themselves and therefore know how important it is to work efficiently and add value to your business.

Anno 2024, then, we need to remember 1 thing above all else: it no longer matters what form of contract you choose. As long as you get the right expert in the right chair within your company.
Choose expertise, not contract form.

Oh yeah ... and trust GIGHOUSE to help you with your search for the right expert!

Sources:

HR Statistics 2023: Recruitment, Labor Market, Resumes, Job Applications!

https://www.health.belgium.be/en/publications-and-research
https://www.securex.be/nl/personeelsbeleid/loonkosten-en-verloning
Thanks to our sister companies within House Of HR / Accent Group

to help complete missing numerical data so we could do the proper analysis.