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.
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.
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
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?
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.
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 .
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.
For Salaried Employees To compute the hourly rate for a salaried employee with a monthly salary of ₱20,000:
Monthly Salary : ₱20,000Work Hours in a Month : Approximately 173.33 hours (based on 8 hours/day × 5 days/week × 4.33 weeks/month). Calculation :
Hourly Rate=20,000÷173.33≈115.38 Hourly rate = ₱115.38 per hour For Daily Wage Earners To compute the hourly rate for a daily wage earner earning ₱610 per day
Daily Wage : ₱610Work Hours in a Day : 8 hours. Calculation
Hourly Rate=610÷8=76.25 Hourly rate = ₱76.25 per hour For Freelancers or Contractors To compute the hourly rate for a freelancer with a desired annual income of ₱500,000 and estimated expenses of ₱50,000, working around 1,200 billable hours in a year:
Desired Annual Income : ₱500,000Estimated Annual Expenses : ₱50,000Total Income to Cover : ₱500,000 + ₱50,000 = ₱550,000Billable Hours in a Year : 1,200 hours. Calculation
Hourly Rate = (500,000+50,000) ÷ 1,200 = 550,000÷1,200 ≈458.33Hourly rate = ₱458.33 per hour Read Also:
REFERENCES:
Department of Labor and Employment (DOLE) (https://www.dole.gov.ph/) National Wages and Productivity Commission (NWPC) (https://www.foi.gov.ph/agencies/nwpc/) Labor Code of the Philippines (https://amslaw.ph/philippine-laws/labor-law/labor-code-law-of-the-philippines(1))
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