Calculating the Average Monthly Hours
One of the most frequent questions asked about the payslip is "Why are the Basic Hours different from the hours worked?"
This question generally comes up because employees paid on a monthly basis have their basic hours generally listed as 173.33 hours!
In this guide, we will show you how you can calculate the basic hours for all full-time and part-time employees.
Calculating Basic Hours for a Full-time Employee
For a full-time employee on a fixed monthly salary, the typical hours worked per month are listed as 173.33 hours. This number is derived from the division of total working hours in the year (2080 hours) by the number of months within the year (12).
2080 Hours / 12 Months = 173.33 Average Monthly Hours
The 2080 hours in the above equation are the total working hours, calculated from the following formula
40 Hours x 52 Weeks = 2080 Hours
Why Should the Hours be Averaged Across All Months?
Since the employee is receiving a fixed pay every month, the basic hourly rate has to be consistent throughout the year. Hence, for someone earning £24,000 in a year, the monthly pay would have to be listed as £2000 for 173.33 hours of work. Otherwise, the basic salary would no longer match the employee's basic hourly rate.
Being paid the same amount every month has its advantages. For instance, February is a shorter month, with generally 160 hours of scheduled work. If the employee were to be paid exactly hour per hour, the employee's income in February would be less, which could jeopardise their budgeting and payment of bills.
Calculating Basic Hours for a Full-time Employee Working Less Than 40 Hours per Week
If the employee works on a reduced hours basis, a similar calculation applies.
You first multiply the weekly hours by the number of weeks in the year, and then divide by the number of months:
(Weekly Hours x 52 Weeks / 12 Months = Monthly Averaged Hours)
Calculating Basic Hours for a Part-time Employee
Part-time employees can be either paid at an hourly wage, based on the hours they work, or a fixed salary each month. This depends on the basis of their employment and contract.
Hourly Wages
In the case that the employee is being paid per each of hour work, then the hours in the payslip should match the amount they have worked. If the employee works over the limit of the normal weekly hours, those hours should otherwise be listed as overtime.
Fixed Salary
Employees who are employed on a part-time basis but receive a fixed salary each month can use a similar formula to the one for full-time employees.
You first multiply their weekly hours by the number of weeks in the year, and then divide by the number of months:
(Weekly Hours x 52 Weeks / 12 Months = Monthly Averaged Hours)