What are you really earning per hour?

Divide your annual salary by your total paid working hours in the year. For a UK employee with 5.6 weeks holiday at 37.5 contracted hours: Annual salary / (37.5 x 46.4) = hourly rate. So £37,430 / 1,740 = £21.50/hour. If you use 52 weeks instead of 46.4, the hourly figure drops because you are dividing by more hours than you actually work.

The UK statutory entitlement of 5.6 weeks (28 days for a full-time worker) includes bank holidays. If your employer gives bank holidays on top of your contractual leave, increase the holiday weeks input. For example, 25 days plus 8 bank holidays equals 33 days, which is 6.6 weeks. More holiday weeks means fewer paid working hours, which increases your effective hourly rate.

Both are useful. Contracted hours show the rate your employer is technically paying per agreed hour. Actual hours show the true rate including unpaid overtime. If you are comparing a salaried role against freelance work, actual hours is the meaningful figure. This calculator shows both when you enter different values for each field.

The National Living Wage for workers aged 21 and over is £11.44 per hour in 2024/25. The median hourly rate for all employees is approximately £17.80. So the minimum wage is roughly 64% of the median, placing minimum wage earners at approximately the 15th to 20th percentile of the UK hourly earnings distribution.

The federal minimum wage remains $7.25/hour. The BLS reports that the median hourly wage across all occupations is approximately $23-$24 per hour (OEWS 2024). Many states have higher minimums: California and Washington both exceed $16/hour. This means the federal minimum is well below the national median, and the effective minimum in high-cost states is much closer to the median than the federal floor suggests.

The ONS ASHE 2024 publishes median hourly rates by Standard Occupational Classification (SOC) group. Professional occupations (SOC Group 2) have a median significantly above the all-employee median of £17.80. Elementary occupations (SOC Group 9) sit near or below the National Living Wage. The widest gap in hourly earnings is between senior managers and directors, where median hourly rates exceed £30, and the lowest-paid service roles at the minimum wage. The same hierarchy applies in the US via BLS OEWS data, where management occupations have a median hourly wage of approximately $58 against a national median of $23-$24.

Salaried employees typically receive the same pay regardless of hours worked above their contracted threshold. Hourly employees are paid for each hour worked. For roles where overtime is common, salaried workers often provide more hours for the same pay than hourly workers, meaning their effective hourly rate is lower. For roles where hours are consistent and predictable, the distinction is primarily administrative. Some salaried roles also include benefits (pension contributions, private health insurance, paid leave) that do not appear in the hourly rate calculation but add significant effective compensation.

UK contractors working inside IR35 are taxed similarly to employees but typically do not receive the same holiday pay, sick pay, pension contributions, or employer NI savings. This means a contractor inside IR35 on £500 per day is not equivalent to a permanent employee on the same day rate. The effective difference depends on your contract rate, holiday taken, and pension arrangements, but inside-IR35 contractors often need a day rate 25-40% higher than comparable permanent roles to achieve equivalent net income. Use the IR35 calculator to model the specific difference for your situation.