Home
Back
Contract Rate Formula:
| From: | To: |
The Permanent Salary to Contract Rate calculation converts an annual permanent salary into an equivalent contract rate, accounting for additional loading percentage to cover benefits, taxes, and other contract-related costs that are typically included in permanent employment packages.
The calculator uses the contract rate formula:
Where:
Explanation: The formula calculates the hourly equivalent of the permanent salary and adds a loading percentage to compensate for the lack of benefits typically provided to permanent employees.
Details: Accurate contract rate calculation ensures that contractors are fairly compensated for their work, taking into account the additional costs and lack of benefits compared to permanent employment. This helps both contractors and employers establish fair market rates.
Tips: Enter the annual permanent salary in dollars and the desired loading percentage. The loading percentage typically ranges from 15% to 30% depending on the industry, location, and specific contract terms.
Q1: Why divide by 1560 hours?
A: 1560 represents the standard annual working hours (37.5 hours/week × 52 weeks), which is commonly used for full-time employment calculations.
Q2: What is an appropriate loading percentage?
A: Loading percentages typically range from 15% to 30%, depending on factors such as industry standards, location, benefits being compensated for, and market conditions.
Q3: Does this calculation include superannuation?
A: The loading percentage should account for superannuation and other benefits that permanent employees receive but contractors must cover themselves.
Q4: Can this formula be used for part-time conversions?
A: Yes, but you may need to adjust the divisor based on the actual number of working hours for the part-time arrangement.
Q5: How does this compare to market rates?
A: While this calculation provides a baseline, actual contract rates should also consider market demand, specialized skills, and current industry rates.