How to Use This Tool
Enter an hourly rate or an annual salary and everything else follows. The hours and weeks are editable because the standard assumptions do not fit everyone.
Where 2,080 comes from
40 hours a week times 52 weeks. It is a convention rather than a fact, and it quietly assumes that paid leave and public holidays are working time — which is true for an employee, because they are paid for them.
So an employee on 30 an hour earns 62,400, and the days they spend not working are already inside that number.
Some employers use 2,088 hours (365 days ÷ 7 × 40, allowing for the odd days) and some payroll systems use 2,086.67. The differences are under half a per cent and they matter only when reconciling a payslip to the decimal.
Biweekly is not semi-monthly
These are routinely confused and they produce different cheques:
- Semi-monthly — twice a month, 24 payments a year. On 62,400 that is 2,600.00 each, and pay dates land on the same dates every month.
- Biweekly — every two weeks, 26 payments a year. That is 2,400.00 each, and pay dates drift through the month.
- Four-weekly — 13 payments, 4,800.00 each. Not monthly, despite feeling like it.
Biweekly also produces two months a year with three pay dates, which is a well-known source of confusion when budgeting against monthly bills.
The contractor conversion
"I earn 30 an hour, so I will charge 30 an hour" is the most expensive mistake in going independent. Three separate things have to be recovered.
- Unpaid time off. 15 days of leave and 10 public holidays is 200 hours. Billing only the remaining 1,880 needs 33.19 an hour to reach the same 62,400 — a 10.6% uplift on its own.
- Unbillable time. Finding work, quoting, invoicing, chasing payment, admin, training. Fifteen per cent is optimistic for most independents; a quarter is common.
- Benefits and employer costs. Pension or retirement contributions, health cover, insurance, equipment, sick pay, and the employer share of payroll taxes. Twenty per cent of salary is a conservative placeholder and it varies enormously by country.
Stacked up, the widely used rule of thumb is that a contractor needs roughly 1.5 times the employee hourly rate to be in the same position — and the calculation here shows why that is arithmetic rather than greed.
What this cannot include
Tax is deliberately absent. Rates, thresholds, allowances and the treatment of self-employment differ by country, by region, by filing status and by year, and a built-in figure would be wrong for almost everyone. Everything here is gross.
Also missing: overtime rules, bonuses, equity, shift premiums, pension matching thresholds, and the value of employment protection. Some of those favour employment strongly and none of them appear in an hourly rate. This is arithmetic, not financial advice.
