What capital budget can a business justify when replacing a single UK minimum wage employee with labelling automation?
Introduction
Labelling automation offers measurable financial savings and operational efficiency. But how much should a business sensibly invest in automation to replace a single full-time employee — particularly one paid at the UK minimum wage?
This article explores the real-world financial impact of such a decision, correcting some common misconceptions and illustrating how even a modest capital expenditure can generate significant long-term value.
The Labour Cost Baseline
1. Employee Salary (2024/25 minimum wage)
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£11.44/hour × 2,080 hours (40 hours/week × 52 weeks)
= £23,795.20
2. Employer Costs
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Employer National Insurance: 13.8% over £9,100 threshold
= £2,028.56 -
Employer Pension (min 3% of qualifying earnings): ~£437.85
(qualifying earnings approx. £14,595)
Total Employer Cost:
£23,795.20 + £2,028.56 + £437.85
= £26,261.61
(Rounded up for margin: assume £26,500 per year per employee)
The One-Year Payback Calculation
If a business wants a 1-year payback, it can invest up to the after-tax equivalent of £26,500 — leveraging the 100% capital allowance (Full Expensing) and 25% Corporation Tax rate:
Max Budget = £26,500 ÷ (1 – 0.25)
= £35,333.33
✅ Corrected figure: A company could justify spending £35,333 on a labelling machine to replace just one full-time minimum wage employee — and still achieve full payback in one year.
10-Year Savings with Inflation
Assuming:
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2% annual wage inflation
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The machine continues to replace 1 full FTE per year
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No additional labour needed
-
No major breakdown costs
Using compound wage increases, the 10-year cumulative savings would be:
~£293,000 gross savings
Less initial machine cost: £35,333
= £257,667 net gain over 10 years
And That’s Just the Direct Savings
Beyond wage costs, automation also brings:
✅ Reduced RSI and absenteeism
✅ No HR, sick leave, or training overhead
✅ Improved label consistency and compliance
✅ Better throughput and presentation
✅ No recruitment headaches
And crucially:
Your best staff don’t leave — they do better work elsewhere.
Choosing the Right Machine & Partner
All these savings are only realised if your solution:
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Is robust enough to run day-in, day-out for 10+ years
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Is supported properly when issues arise
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Uses modular components you can easily maintain or hot-swap
Choose wisely. Not all labelling machines — or suppliers — are created equal.
Conclusion
Replacing one minimum wage role with automation?
💡 You can justify a budget of £35,333 and expect a full payback in 12 months — with a quarter of a million pounds in net profit over 10 years.
It’s not just cost-cutting.
It’s opportunity creation.
Disclaimer: Figures are for illustrative purposes only. Please seek advice from your accountant or financial advisor before making investment decisions.
