How do I Compute for my Hourly Rate?

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Being employees, it is of mere importance that we know how much we’re working for on a monthly basis. This is a given; our monthly salaries are already given to us and that’s part of the reason why we’re accepting jobs and offers from different employees. But do you actually calculate how much you’re earning per day? per week? Do you even know how much money you generate per hour? In this article, we will teach you how you can compute not just for your daily rate, we’ll help you compute how much your hourly rate is depending on your monthly salary.

Why is computing for my hourly rate important?

In general, knowing how to compute is an essential tool. It’s not only applicable to compensation, knowing how to compute for things can actually help you even when you go abroad for either vacation or for work. It’s a mere fact of knowing how much you’re getting, how much you’re buying a certain product for, and somewhere along those lines.

Image: Payroll Hero

Here in the Philippines, especially in call centers, there are companies in which holidays, night differentials, and hazard pay premiums are given or added on an hourly basis. Another reason why knowing how to compute for an hourly rate is an important thing.

Read: How to compute for Overtime Pay

Computing for your hourly rate

Now in computing for your hourly rate, you would need the following variables:

  • Monthly Rate
  • Total number of working days in a year
  • Your total number of working hours in a day

NOTE: The total number of working hours in a day may vary from person to person or from company to company. If you’re unsure of how much hours you work for in a day, inquire about it first. Furthermore, if you think you’re working for more than five (5) days a week, inquire about it as well.

Now that you know all of your variables, it’s time for you to know the formula on how you can compute for your hourly rate. In the examples we’ll provide, let’s assume that the monthly rate is Php20, 000.00; the total number of working days in a year is 261 days; and lastly, the total number of hours in a day is 8 hours.

The formula would be: Monthly Rate x 12/(total number of working days)/(total number of working hours) = hourly rate

  • 20000 x 12 / 261 / 8
  • 240000/ 261 /8
  • 919.5 / 8
  • 115 = hourly rate

By putting the formula to work, we arrive at a Php115.00 hourly rate if the basic salary of the employee is Php20, 000.00 per month.

Read: How to Compute your Salary during Regular Holidays and Special (Non-Working) Days?

But what if the employee is paid on a daily basis?

If the employee is paid on a daily basis, we’ll follow the same formula; same procedure. We just have to take out the daily rate and divide it by the number of hours.

For example, if your daily rate is Php700.00 and you have to work for nine (9) hours a day, the formula would be:

  • Daily rate / Number of hours
  • 700 / 9
  • 77.8 = hourly rate

There you go, you now know how to compute for your daily rate. You just have to know the variables beforehand so that you can properly calculate it.

Wait, how did we know the total number of working days in a year?

We all know that a calendar year has 365 days, so why is the total number of working days only 261? We should, of course, exclude the weekends and the holidays. In a 7-day week, we’re only required to go to work at least 40 hours. That means for 5 days, we only work 8 hours every day.

In addition to that, the Department of Labor and Employment has the formula on how that is computed. Click on this link to access the formula for both non-muslims and Muslims.

Why is it important that I know my hourly or even my daily rate?

Our employers are not perfect; they commit mistakes as well especially if the employees of a certain corporation are thousands. By you knowing how you should properly compute for your daily or hourly rate, you get to see whether or not there are errors on your payslip when payday is just right around the corner.

If you notice an error within the computation, let your immediate supervisor aware about this right away so they can help you with the modifications and with the corrections. You can’t expect that your pay is always right and is always spotless; people and the payroll team make mistakes, too.

Read: How to compute 13th-month pay

But now that you’re equipped with the knowledge, you can do the computation on your own without asking the help of someone from your payroll department. You can refer to our guide/s listed here for further questions, clarifications, and assistance.

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