Annual salary: should it be calculated over 48 or 52 weeks?

Michele1800

Hi everyone!
I don't seem to find an answer to the question in the title anywhere on the internet, so I'm hoping one of you MSE mates will be able to help me with this. I'm currently working in a restaurant through an agency, being paid by the hour. The GM has asked me to stay permanently and offered me an annual salary, which is based on my current hourly rate. My contracted hours would be 48 per week, so in order to calculate the annual figure I think I should multiply my hourly rate by 48 and then again by 52, which is the number of weeks in a year. However, when I heard the T&C of my employment, it came to my attention that the annual salary on offer was lower than expected. I was told that figure has been calculated over 48 weeks instead of 52, because I would be required to take holidays for the remaining 4 weeks. But this doesn't make sense at all to me. The annual salary should be calculated over 52 weeks in my opinion. Going on holiday simply means getting paid without actually going to work. But in order for this to happen, the annual salary needs to be calculated over 52 weeks, otherwise I would effectively be going on holiday without getting paid. Who is right? Should I multiply my weekly wages by 48 or 52 when working out what my annual salary should be? Thank you very much!

Grumpy_chap

Does your current hourly rate include "rolled up" holiday pay, so the extra 12.07%?

Michele1800

Grumpy_chap said:

Does your current hourly rate include "rolled up" holiday pay, so the extra 12.07%?

No, my current hourly rate does not include holiday pay. I get my holiday entitlement at the end of the contract

prowla

I am salaried.

I get the same amount every month.

ie. The salary is a yearly amount, which is paid in 12 equal chunks.

Where I take the holidays is up to my, but I still get the same per month.

Of course, my employer pays me on my worth to the company, so that's 52 weeks - holiday entitlement - bank holidays - days training (if any) - sick days (if any).

If you are expected to work the same hours per year, then you should expect the same pay, IMHO.

Your current hourly rate should factor in holiday entitlement.

If you are being given an 11-month contract with 4 weeks unpaid, then that is not "permanent".

General_Grant

The OP should show the client/employer that the hourly rate they receive from the agency is also paid to them when they take holiday of the statutory amount (= 28 days).  

They should also check the holiday entitlement.  The company mentions 4 weeks but that is not the statutory amount.  Are they also offering 8 bank holidays in addition?  If they are (which would make the full entitlement lawful) then presumably they would be paying for those days and not excluding them from their faulty salary calculation.

And actually working up to an annual salary from an hourly rate should involve 52.142857 weeks.  (Obviously the precise decimal place to use can be adjusted.)

jackieblack

prowla said:

If you are being given an 11-month contract with 4 weeks unpaid, then that is not "permanent".

It could be. ‘Seasonal’ work can still be on a permanent contract.

For example, many support staff working in schools have permanent contracts for 43.5 weeks per year which is term time plus annual leave. The remaining weeks are unpaid. They get paid in 12 equal monthly payments.

Mark_d

The GM is offering you a contract which is different to your current contract with the agency.  The new package might be based on your existing hourly rate - but as you'd be getting more benefits the GM can justify your pay being marginally lower.

You may be able to negotiate a better pay with the GM but the GM is under no obligation to pay you more.  Ultimately if you don't like what's being offered, don't take it!

General_Grant

Mark_d said:

The GM is offering you a contract which is different to your current contract with the agency.  The new package might be based on your existing hourly rate - but as you'd be getting more benefits the GM can justify your pay being marginally lower.

You may be able to negotiate a better pay with the GM but the GM is under no obligation to pay you more.  Ultimately if you don't like what's being offered, don't take it!

Conversely, the employeer is saving the amount they pay for the agency's profit.

Exodi

Sorry, I'm a bit slow this morning (blame Monday), to make it super straightforward, are you saying:

You currently work for a restaurant through an agency, where you are paid £10 per hour (for example) and at least statutory holiday entitlement.

The employer has offered you a job with an annual salary of £23,040 (for example) which is based on £10 per hour for 48 hours per week, then 48 weeks per year. The implication here is that you take 4 weeks off effectively unpaid.

You suggest that you should be paid £24,960 per year (for example) which is based on £10 per hour for 48 hours per week, then 52 weeks per year, with your statutory holiday entitlement included in this.

If that's the case, I agree with you (and they should note statutory entitlement is 5.6 weeks, unless they count bank holidays separately as General_Grand says).

But of course, that's if the hourly pay is the same in both scenarios. The risk is that the employer then comes back and offers you £9.23 (for example) which works out to an annual salary of ~£23,040 over 52 weeks. Or the bigger risk that they get annoyed and don't offer you anything (which would be cutting off their noses to spite their face, but I know keeping someone on from an agency can be extremely expensive and emotional - we've paid some 5 figure fees in our time!).

I expect you'd be paid monthly? Even though it's been framed that the holiday is unpaid, I'd expect you'd receive £1,920 per month, regardless of when you take your holiday (as per the first example above).

Mark_d

General_Grant said:

Mark_d said:

The GM is offering you a contract which is different to your current contract with the agency.  The new package might be based on your existing hourly rate - but as you'd be getting more benefits the GM can justify your pay being marginally lower.

You may be able to negotiate a better pay with the GM but the GM is under no obligation to pay you more.  Ultimately if you don't like what's being offered, don't take it!

Conversely, the employeer is saving the amount they pay for the agency's profit.

I agree the employer is indeed saving money.  However that does not dictate what salary the employer should offer.  The employer chooses what they consider to be a fair and reasonable offer.  If they're making more money, they don't have to give it to you

DullGreyGuy

General_Grant said:

Mark_d said:

The GM is offering you a contract which is different to your current contract with the agency.  The new package might be based on your existing hourly rate - but as you'd be getting more benefits the GM can justify your pay being marginally lower.

You may be able to negotiate a better pay with the GM but the GM is under no obligation to pay you more.  Ultimately if you don't like what's being offered, don't take it!

Conversely, the employeer is saving the amount they pay for the agency's profit.

Only in the long term, in the short term they'll have to pay a finders fee which may not be far off a years worth of temp fees

Ultimately for the op to negotiate salary, they need to consider any other benefits there are of being an employee over agency staff which may or may not make up for any difference in salary.