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Old 27.04.2017, 12:19
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Hourly rate calculation and 13th salary

Hi everyone,

Long time reader, but first question to ask .

Can someone advise what would be a correct formula for calculating an hourly rate when the annual salary is split into 13 installments (as it is common in Switzerland)? The correct calculation of the hourly rate, in this case, is important for some internal processes.

There are 2 approaches that I see, but I'm not entirely sure which is the correct one:

1) The hourly rate is annual salary divided by 12, and further by 21 (number of working days in a month) and number of working hours in a day,

2) The hourly rate is annual salary divided by 13, and then by 21 and number of working hours in a day.

The logic for the first option is that every hour worked is compensated by the current month paycheck and also by a small portion of 13th paycheck (prorated). So irrespective of how many installments the annual salary is split into (whether its 12, 13, or whatever), the actual rate per hour depends on the number of months in a year, and then working hours in that given month.

The logic for the second option is that 13th paycheck is completely separate from the monthly salary payments, hence should not be taken into consideration when calculating the hourly rate.

Thanks in advance for all opinions!
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Old 27.04.2017, 12:22
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Re: Hourly rate calculation and 13th salary

Not sure why you want to break that down into hours? One month you work more days than others so it doesn´t really work that way. Unless you get paid by the hour
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Old 27.04.2017, 12:27
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Re: Hourly rate calculation and 13th salary

If you are hourly paid, the 13nd salary should be a part of the hourly rate. There is no other way to calculate it.
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Old 27.04.2017, 12:27
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Re: Hourly rate calculation and 13th salary

In my view, option 1 is correct. The only other consideration would be how many working hours there are in a year based on the working arrangement.

For example, if you have 8 hrs per day setup, the annual number of hours is 52 weeks x 5 days x 8 hours = 2080 hours.
If you have 10K a month paid 13x => 130K annual salary, it would give an hourly salary of 62.50 (130'000 / 2080)

13th salary, while paid separately, is an entitlement or guaranteed payment which should be considered as part of salary despite the different timing of payout.
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Old 27.04.2017, 14:35
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Re: Hourly rate calculation and 13th salary

There is no single correct option.

http://www.gerichte-zh.ch/themen/arb...echnungen.html

Some helps:

An employee which leaves the company during the year has a pro rata entitlement to the 13th salary.

I would also support this view:
Quote:
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For example, if you have 8 hrs per day setup, the annual number of hours is 52 weeks x 5 days x 8 hours = 2080 hours.
If you have 10K a month paid 13x => 130K annual salary, it would give an hourly salary of 62.50 (130'000 / 2080)
In a leap year there is one additional day Which decreases the hourly rate a tiny little bit.

This should also work for bookkeeping. Just treat public holidays and vacation as paid days off.
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