How to calculate £Hourly Rate from £FTE for part time employee!

anniem
anniem Registered Posts: 1,326
Please can somebody advise on formulas for this one:-

Firstly; If a job is advertised for £22,500 FTE, but only wants someone 23 hours a week, how would you calculate the hourly rate?

Secondly; If a member of staff is on a fixed hourly rate, say £12 per hour, but that person only works part time, how do you calculate the equivalent as a £FTE rate?

Also, there would be the equivalent of four working weeks holiday (20 days holiday full time entitlement) for the part time position and you need to pop bank holidays into both equations too, I suppose.

I'm trying to work out the best way to advertise a part-time position at the moment!

Thanks
FMAAT - AAT Licensed Member in Practice - Pewsey, Wiltshire

Comments

  • AK002
    AK002 Registered Posts: 2,492
    Would you not divide the annual salary by 52 then divide it by the number of hours per week to get an hourly rate?
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    Depends on the number of hours in a full time week, but assuming it's 40 hours then:

    22.5K FTE = 22.5k/52/40 = £10.82 per hour

    conversely £12ph would be 12x40x52=£24,960pa

    Holiday pay is just the standard entitlement pro rata (and you can just word it like that, or you don't even have to say it, as everyone is entitled to basic holiday pay entitlements, pro rated if part time).
  • Paul C
    Paul C Registered Posts: 193 ? ? ?
    Part time and bank hols can also be tricky.

    If someone's non working day is a bank holiday they can loose out - I have seen some employers pro rata bank hols as well so that every one gets a fair share.
  • Londina
    Londina MAAT, AAT Licensed Accountant Posts: 814
    Monsoon wrote: »

    Holiday pay is just the standard entitlement pro rata (and you can just word it like that, or you don't even have to say it, as everyone is entitled to basic holiday pay entitlements, pro rated if part time).

    how do you calculate pro-rata holidays? Example if someone has 25 days holidays (excl bank holidays)? Thanks

  • payrollpro
    payrollpro Registered, FMAAT Posts: 427 Dedicated contributor ? ? ?
    It is clear that you need to know the equivalent full time working week to be able to work this out. I get very annoyed when employers, particularly the public sector, advertises a job, gives the FTE pay and then says its pro-rata to x hours. Why they cannot simply tell you how much they are paying I simply do not know, too honest and straightforward I guess.

    Working out the equivalent weekly rate, AK002, isn't as simple. In the public sector the weekly rate is annual/365x7, whereas in the private sector it is usually annual/52, then you divide by the full time hours. Some use annual/260 to give a daily rate. You simply cannot generalise with pay rates and must examine the full terms and conditions to determine how it is worked out. Sometimes it is easier to download the payroll systems parameter formulas to see how it is worked out. Remember also that that for someone working say three days a week their daily rate is the same as one who work full time, they simply work fewer days, the hourly rate must be bang on as well.

    Holidays are a nightmare, Everyone has an entitlement to 5.6 weeks paid leave, up to a maximum of 28 days and that includes bank and public holidays. Of the eight holidays most are bank holidays but some are public. The employee must get a minimum of 5.6 of their weeks, so if they work three days out of a standard six then they get 5.6 week holiday. Someone on full time gets 5.6 x 6 but capped at 28, the part time employee gets 5.6 x 3 but capped at 14. Several tribunal cases have established that employers are entitled to pro-rate the holiday entitlement when some people claimed they ought to get 28 days even if they only worked one day a week!

    Does that make sense, probably not but its worth studying further if you need to.
  • Londina
    Londina MAAT, AAT Licensed Accountant Posts: 814
    @payrollpro‌ thanks for the reply, just saw it now (I didn't receive a notification of reply, anyway that's another problem..).

    Still holidays didn't make a sense to me, for example if an employee works 3 days a week (total 22.5 hours) and have 25 holidays pro-rata (excluding bank holidays), how many days is actually entitled? I tried to work it out but it's indeed a nightmare and I'm not a payroll expert at all :s
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