A labour rate is often carried forward as one number. That is convenient until an employment cost changes and nobody can say which parts of the old rate were included.
The employer National Insurance changes effective from 6 April 2025 made that weakness visible. A rate described as “all-in labour” needed an identifiable basis before it could be updated reliably.
Start with the payroll calculation agreed for the relevant workforce. Then check the treatment of paid leave, non-productive paid time and other employer costs. The calculation should use a consistent denominator, especially where annual costs are being converted into a working-hour rate.
- Agreed pay basis
- Employer-cost calculation
- Productive paid hours
- Cost per working hour
- Composite item rate
A resource-cost review sequence. Actual payroll treatment must be established for the employer and workforce concerned.
Check the composite rate as well
Once the resource rate changes, follow it through the priced items. A composite rate may already include an attendance or labour allowance entered separately. The update should reach the intended resource without adding another general percentage on top.
Subcontract prices require a different conversation. Ask whether the quotation includes the employment-cost basis applicable to the proposed work period. Do not assume that the contractor’s direct-employment calculation applies to the supplier’s workforce.
A small change log is enough to make the revision reviewable: previous resource rate, revised resource rate, effective date, source and affected estimate items.
The objective is to update the cost once, in the correct place. A larger total is not evidence that the change has been captured properly.