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Old 27.04.2017, 12:19
Join Date: May 2016
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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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