Rate times 2,080 is not a salary
Every converter on the internet multiplies your hourly rate by the hours in a year and hands you the answer. The number is arithmetically fine and it cannot be compared with a salary, because the two figures do not contain the same amount of work.
A salaried person on £30,000 is at work for about 46.4 weeks and is paid for 52. The other 5.6 weeks are paid holiday, and they are part of what the salary buys. An hourly worker whose holiday is unpaid is at work for the same 46.4 weeks and is paid for 46.4.
| £15 an hour | Hours | Pay |
|---|---|---|
| What a converter tells you | 2,080 | £31,200 |
| What lands, if holiday is unpaid | 1,856 | £27,840 |
Turn it round and the point is sharper. The hourly rate that matches a £30,000 salary is £16.16, not the £14.42 you get by dividing by 2,080. That is a 12% gap, and it runs in the direction that makes hourly work look better than it is.
Which raises the question the tool exists to answer
Almost every worker in the UK is entitled to 5.6 weeks of paid holiday. The Working Time Regulations 1998 are not limited to salaried employees: hourly, casual and zero hours staff have the same entitlement. So if a rate has no holiday behind it, one of two things is true.
- It is rolled up. Lawful for irregular hours and part-year workers, provided the holiday element is calculated properly and shown as a separate line on the payslip. If it is not on the payslip, it is not rolled up, it is just absent.
- Or the entitlement is not being paid. Which is a different conversation from the one about the rate.
Either way it is worth knowing before comparing two offers, because the answer moves the comparison by more than most negotiations do.
How much holiday, exactly
5.6 weeks, capped at 28 days. On five days a week that is 28. On three days it is 16.8. The cap is why somebody on six days a week still gets 28 rather than 33.6. An employer may count bank holidays inside that figure and many do, so "20 days plus bank holidays" and "28 days including bank holidays" describe the same amount of time off.
And there is no single number of hours in a year
52 weeks is the convention. A year is 52.18 weeks, which is where the US federal standard of 2,087 hours comes from. UK payroll commonly uses 52.14. On a £30,000 salary:
- 52 weeks: £14.42 an hour
- 52.14 weeks: £14.38 an hour
- 52.18 weeks: £14.37 an hour
Five pence. It matters only when two offers are close, which is exactly when people are comparing them, so the divisor is a choice here rather than a constant buried in the code.
The same correction applies to daily rates. Salary divided by 260 counts your holiday as working days. Divided by the 232 days you are there, the daily value of the salary is higher than the naive figure suggests, which matters if you are pricing a day rate against a permanent job.
Common questions
How do I convert an hourly rate to a salary?
Multiply the rate by your weekly hours and by the weeks in a year, which for 40 hours is 2,080. That gives you a number, and it is not one you can compare with a salary. A salary pays you through your holiday and an hourly rate may not, so £15 an hour looks like £31,200 and lands as £27,840 if the holiday is unpaid. The comparable figure is the one worked out over the hours you are at work.
What hourly rate matches a £30,000 salary?
About £16.16, not the £14.42 you get from dividing by 2,080. The salary buys a year of your availability including 5.6 weeks of paid holiday, so you are at work for around 1,856 hours rather than 2,080. To take home the same money on an hourly rate with unpaid holiday, the rate has to cover the salary across the hours worked. That is a 12% difference and it is why the naive conversion makes hourly work look better than it is.
Am I entitled to paid holiday on an hourly rate?
Almost certainly yes. The Working Time Regulations 1998 give nearly every worker 5.6 weeks of paid holiday, and that includes hourly, casual and zero hours staff. It is not something limited to salaried employees. So an hourly rate with no holiday behind it is either rolled up, in which case the holiday element must be identified separately on your payslip, or the entitlement is not being paid at all. Both are worth asking about before you compare the two offers.
How many hours are in a working year?
There is no single answer, which is why this tool lets you choose. 52 weeks times your weekly hours is the convention and gives 2,080 for a 40 hour week. A year is 52.18 weeks, so 2,087 is the US federal standard. UK payroll commonly uses 52.14. On a £30,000 salary those three give £14.42, £14.38 and £14.37 an hour. The difference is small and it is enough to make two offers look equal when they are not.
How much holiday am I legally entitled to?
5.6 weeks, capped at 28 days. On a five day week that is exactly 28 days. On three days a week it is 16.8 days. The cap is why someone working six days a week still gets 28 rather than 33.6. An employer can count bank holidays inside that entitlement and many do, so "20 days plus bank holidays" and "28 days including bank holidays" are the same amount of time off.
Is rolled-up holiday pay allowed?
For irregular hours and part-year workers it is, provided it is calculated properly and shown as a separate line on the payslip so the worker can see what they are getting. What is not allowed is an employer saying the rate is higher to account for holiday without any of that being identified. If your payslip does not break it out, the rate you are being quoted is probably just the rate.
Why does this show a daily rate different from salary divided by 260?
Because 260 is five days times 52 weeks, which counts the days you are on holiday as working days. If you take 28 days of holiday you are at work for 232 days, so the true daily value of the salary is higher than the naive division suggests. It is the same correction as the hourly one, applied to days.