Determining how many work hours are in a year is useful when calculating a salaried employee's hourly rate for payment purposes. The formula to determine this number is simple, but it varies based on how many hours the employee works in a typical week and how many vacation days and holidays the employee receives.
TL;DR (Too Long; Didn't Read)
To calculate how many full-time work hours are in a year, multiply the hours worked in a week by the number of weeks in a year (52) and then deduct any hours lost to vacation days and holidays.
Total Work Hours in a Year
To figure out how many hours are in a "work year," multiply the number of work hours in a week by the number of weeks in a year. In other words, multiply a typical 40 hour work week by 52 weeks. That makes 2,080 hours in a typical work year.
Remember that not all employees work 40 hours. Some full-time employees only work 35 hours a week (which comes to 1,820 hours per year) and part-time employees may work any number of hours less than that in a week.
Calculating Full-Time Hours per Year
Of course, most people don't work five days every week, they usually have some holidays and vacation days. When calculating full-time hours, it is important to subtract these hours from the total work hours to figure out how many hours an employee will be working. For example, if a person works 8 hours a day, but gets 8 holidays a year and 12 vacation days, you would subtract 160 hours from the total 2,080 work hours per year to learn that the employee works 1,920 hours per year.
How to Use This Information
The number of work hours in a year can be useful when figuring out an employee's yearly pay for a salary or to calculate salary into an hourly rate if schedules are changing. To figure out an employee's yearly pay for a salary, just multiply the suggested hourly rate by the number of work hours in a year. Your business may choose to pay for vacation days or even holidays and if that is the case, you will need to use the number of hours in a year before subtracting vacation days or holidays. For example, if Juan earns $23 an hour, works 40 hours a week, gets 10 holidays off a year and 14 vacation days per year, he should earn $47,850 if he receives paid holidays and vacations. If he gets paid vacation days, but holidays are unpaid, he should earn $46,010 ($47,850 less his hourly rate multiplied by the 8 hours from each of the 10 holiday days). If all of his vacation days and holidays are unpaid, he should receive $43,434 ($47,850 less his hourly rate multiplied by the 8 hours from each of the 24 holiday and vacation days).
To translate a person's salary into an hourly rate, simply divide the yearly salary by the number of work hours in a year. Again, remember to include any vacation or holiday hours that the employee is paid. For example, if Alicia earns $72,000 a year, works 40 hours a week and gets 7 paid holidays and 10 unpaid vacation days, she would work a total of 2,000 hours (2,080 less 80 vacation hours). This means she would earn $36 an hour.
Paying Salaried Employees
It is up to the employer to choose whether to pay biweekly or semi-monthly, but however a paycheck is issued, employers will need to know the employee's per-hour rate to determine their pay in a given period. A weekly paycheck for an employee that works 40 hours a week should be for 40 hours, for bi-weekly payments, the amount should cover 80 hours and for semi-monthly payments, the pay period should be 86.67 hours long (24 pay periods divided by 2,080 standard work hours per year). Any unpaid holidays or vacation days should be deducted from the hours used in the pay period calculation.
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