Hourly pay, overtime and comparing two job offers
7 min read · Updated 2026-10-12 · MoneyCalc
Two offers on similar salaries are not comparable without accounting for the hours you actually work, the unpaid time the job creates, and what it costs you to get there. An hourly rate is a starting point for the comparison, not the answer to it.
From hourly rate to annual pay
Multiply the hourly rate by paid hours per week and by the number of working weeks in the year. The number that surprises people is the holiday and unpaid leave: fifty-two weeks is not the right base, and using it overstates annual pay by several per cent.
Where overtime is worked regularly, add it at the correct premium rather than the base rate. Time and a half on top of the base is not half as much again in total pay — it is a fifty per cent uplift on hours that are usually not a large share of the total.
Overtime rates, and where the rules differ
Time and a half is one and a half times the base rate; double time is twice. In many countries the threshold and the premium are set by legislation, and the rules around which hours count vary — night shifts, weekends and public holidays are frequently treated differently from ordinary weekday hours.
Check the threshold before relying on overtime income. Above the weekly or daily limit, overtime can stop counting entirely, which changes the calculation for anyone near the cap.
Effective hourly rate is the honest comparison
Divide total compensation by the total hours the job occupies. Hours at home that were unpaid — paperwork, messaging, travel between appointments — are hours worked, even though no one paid for them, and a role with a higher rate and more unpaid time can easily pay less per hour.
Commuting is the same calculation. A higher salary thirty minutes further away each way can be worth less per hour than a lower one nearby, and the difference compounds across a working year.
What else belongs in the comparison
Benefits are compensation with a value: pension contributions, private healthcare, holiday entitlement, sick pay, and the cost of commuting or working from home. Put an estimate on each rather than treating them as a bonus.
Contract type matters too. A permanent salary with a probationary period and a contractor rate invoicing monthly are different risks, and the hourly comparison should account for the gap in paid holiday and unpaid sick days.
Run your own numbers
Free calculators that answer the “how much” version of this question. They run entirely in your browser — nothing you type is uploaded or stored.
Common questions
What is my effective hourly rate?
Total compensation divided by all hours the job occupies, including unpaid time at home and commuting. A higher advertised rate can pay less per hour once those are counted.
How is time and a half overtime calculated?
One and a half times the base hourly rate for each overtime hour. Check the weekly threshold, because overtime hours above it may not count at all.
Should I compare two offers on salary alone?
No. Add the value of benefits, subtract unpaid work and commuting, and divide by total hours. That produces the effective hourly rate, which is the only fair basis for comparison.
MoneyCalc provides general information only and is not financial, investment, tax or legal advice. Figures are illustrative and depend on your own circumstances. See our full disclaimer.