What Does Outsourced HR Actually Cost?
One of the first questions business owners ask when considering outsourced HR is "how much will it cost?" The honest answer is that it depends on your business, your headcount, and how much support you need. But there are clear pricing models and typical ranges that can help you budget with confidence.
For most UK SMEs, outsourced HR costs somewhere between £100 and £500 per month. That might sound like a wide range, but it reflects the flexibility of the market. A five-person startup with straightforward needs will pay very differently from a 40-person business navigating a restructure.
This guide breaks down the main pricing models, typical UK price ranges, what you should expect to be included (and what usually costs extra), and how outsourcing compares to hiring an in-house HR manager.
The Three Main Pricing Models
Monthly Retainer (£100 to £500+ per month)
The most common model for ongoing HR support. You pay a fixed monthly fee for access to HR advice and support, giving you predictable costs and year-round cover.
A typical retainer includes a phone and email advice line, template documents, and guidance on day-to-day people management issues. It works well for businesses that want a consistent relationship with their HR provider and the reassurance of knowing expert help is always available.
Most outsourced HR consultancies, including Rebox HR, offer tiered retainer packages so you can choose the level of support that matches your needs and budget.
Per Employee Per Month (£5 to £15 per employee)
This model scales with your headcount. You pay a set fee per employee each month, which makes costs easy to predict as your team grows.
It is common where HR consultancy is bundled with HR software, such as a cloud-based platform for managing leave, documents, and employee records. If your business is growing and you want a solution that adjusts automatically, this model is worth exploring.
Hourly or Day Rate (£60 to £150+ per hour, or £400 to £1,000 per day)
Pay-as-you-go pricing is ideal when you need help with a specific project or occasional advice without committing to a monthly contract. The per-hour cost is higher, but you only pay for the time you use.
This model suits businesses that need one-off project support, such as managing a TUPE transfer, preparing for a tribunal, or running a redundancy programme. It is also a good starting point if you are not sure how much ongoing support you will need.
Typical UK Price Ranges
To give you a clearer picture, here is what outsourced HR typically costs based on business size:
- Small firm (5 to 10 employees): £100 to £250 per month on a retainer
- Medium firm (15 to 30 employees): £200 to £400 per month
- Larger or more complex needs: £500 to £800+ per month
- Specialist projects (TUPE, restructuring, tribunal preparation): £150+ per hour
These figures are a guide based on the current UK market. Exact pricing will depend on the provider and the scope of what is included.
What is Usually Included in a Retainer
A standard retainer package will typically cover:
- Telephone and email HR advice line during business hours
- Template employment contracts, policies, and staff handbooks
- Guidance on disciplinary and grievance procedures
- Holiday and absence management support
- Employment law updates and compliance checks
- Support with day-to-day people management questions
This gives you a solid foundation of HR support for routine matters and ensures you stay compliant with current employment law.
What Usually Costs Extra
More complex or time-intensive work is usually charged separately, either on top of a retainer or on an ad-hoc basis:
- On-site visits or face-to-face meetings
- Complex casework such as formal disciplinaries, grievances, or tribunal representation
- TUPE transfers and due diligence
- Redundancy programmes and consultations
- Recruitment support and candidate sourcing
- Training delivery for managers or staff
- HR software licensing and implementation
Understanding the boundary between what is included and what is extra is one of the most important things to clarify before signing up with any provider.
Outsourced HR vs. In-House: The Cost Comparison
This is where the numbers become compelling. Hiring a dedicated in-house HR Manager in the UK typically means:
- Salary: £35,000 to £55,000 per year
- Employer National Insurance (15% from April 2025): £5,250 to £8,250
- Pension contributions (3% to 8%): £1,050 to £4,400
- Benefits, training, and overhead costs: variable
The total employment cost for an in-house hire comes to roughly £45,000 to £70,000+ per year. And that gives you one person, with one set of experiences and one perspective.
By comparison, outsourced HR for a 20-person business on a mid-range retainer costs roughly £3,000 to £6,000 per year. You get access to a team of qualified consultants with broad experience across multiple sectors, employment law specialisms, and the ability to scale support up or down as your needs change.
For most SMEs with fewer than 50 employees, outsourcing delivers significantly better value while providing broader expertise than a single hire.
Factors That Affect the Cost
Several things influence where your business falls within these price ranges:
- Number of employees and how quickly your headcount is growing
- Workforce complexity, including shift workers, remote teams, or multi-site operations
- Industry sector and associated regulatory or safety requirements
- Level of support needed, from advice-only to hands-on HR management
- Specialist projects such as TUPE, redundancy, or restructuring that require dedicated time and expertise
The right provider will assess your business and recommend a package that fits, rather than trying to push you into a one-size-fits-all plan.
Why Demand for Outsourced HR is Rising in 2026
The UK employment law landscape is shifting significantly, and many SMEs are turning to outsourced HR to help them navigate the changes without building an in-house team.
The Employment Rights Act 2025 introduced sweeping reforms that affect how businesses hire, manage, and dismiss employees. Employer National Insurance rose to 15% from April 2025, putting pressure on budgets and making cost-effective HR support more attractive than ever.
Looking ahead, the unfair dismissal qualifying period is dropping to six months from January 2027. This means employers who do not follow proper procedures face greater risk, even with relatively new employees. The removal of the compensation cap for certain claims makes the financial consequences of getting it wrong considerably more serious.
For many SMEs, the cost of professional HR support is a fraction of what a single tribunal claim or compliance failure would cost. Outsourcing is no longer just a cost-saving measure. It is a risk management strategy.
How to Choose the Right Provider
Not all outsourced HR providers are the same. When comparing options, consider these factors:
- Qualifications and experience: Look for CIPD-qualified consultants or those with substantial, demonstrable HR experience
- Approach: Do they offer proactive advice to prevent problems, or just react when things go wrong?
- Transparency: Make sure you understand exactly what is and is not included in the price
- Sector knowledge: UK employment law applies broadly, but some industries have specific requirements
- References: Ask for testimonials or case studies from businesses of a similar size to yours
- Flexibility: Can you scale support up for busy periods or complex projects without being locked into a rigid contract?
A good outsourced HR provider should feel like an extension of your business, not an impersonal call centre.
Getting Started
The right HR support looks different for every business. Whether you need year-round cover or help with a specific challenge, the important thing is understanding what you are paying for and what you are getting in return.
Rebox HR offers flexible retained HR support and ad-hoc HR services tailored to SMEs. Check our pricing page or book a free consultation to discuss what would work for your business.
