How Do You Work Out the Hourly Rate of an Employee From the Annual Salary?
To work out the hourly rate of an employee using their annual salary divide the annual salary by the number of hours worked during the year. A similar calculation can also be done using a monthly salary.
- Calculate the number of hours worked
- Divide salary by hours worked
- To base the calculation by month
To calculate the number of hours worked in a year, take the amount of hours worked in a week and multiply that by 52. So assume the person works 37.5 hours a week. The calculation in this example would be 37.5 multiplied by 52, which equals 1,950 hours. So this employee works 1,950 hours in a year.
To get the hourly rate for the employee, divide the annual salary by the number of hours worked in the year. In the example mentioned above, assume the employee received a salary of $36,000 a year. That calculation would therefore be 36,000 divided by 1,950, which equals $18.46 an hour.
Sometimes it is easier to work out the hourly rate using a monthly salary rather than an annual salary. The number of hours worked in a month is required. If this is not available it can be worked out by multiplying the number of hours worked in a week by 52, and then dividing that by 12. To get the hourly rate divide this figure into the monthly salary.