Reasonableness test on wages and salaries

Apologies for the delay in responding, I have deadlines to meet at the moment:

Company X had 220 employees at 30.04.X4 and a wage bill of 8.197m.
Therefore, average annual salary is 37259 (8.197/220)
They had 260 employees at 01.05.X4.
If there were no other changes, estimated wage bill for 20X5 would be 9687364 (260*37295)

However, there are two changes: increasing # of employees and salary increase:
Salary increas is 1/2 way through the year, therefore need to consider separately 1st and 2nd 6-month periods:

They had 300 employees at 30.04.X5.
Employees increased evenly during the year. i.e. increase of 40 over the year, so increase of 20 in each 6-month period

For 6 months to 31/10/X4, estimated wage bill is:
average # of employees x 6-month salary = (260+280)/2 x $37259/2 = 5,029,965

For 6 months to 31/10/X4, estimated wage bill with 2% increase is:
average # of employees x 6-month salary = (280+300)/2 x $37259/2*102% = 5,510,606

Therefore estimate is 10540571.1 i.e. $10.541m

So if you’re in the UK, employees pay National Insurance Contributions (may be called Social Security Insurance or similar in other countries). This is an example of a statutory deduction – employers must deduct this from employees’ gross pay and pay it over to a tax authority.

It only affects the employees – who are paid “net” of deductions. It doesn’t affect the cost to the employer – they are merely collecting taxes for the state.