# [clug] [OT] Contracting hourly rate calculation

Dale Shaw dale.shaw at gmail.com
Wed Aug 22 22:29:16 GMT 2007

```Hi Chris,

On 8/23/07, Chris Henderson <henders254 at gmail.com> wrote:
> I understand that the calculation of hourly rate should include
> superannuation, annual leave, sick leave, payroll tax exempt fees
> (excld. GST) and anything else that I'm missing but I'm not sure how
> to come up with an hourly rate based on my current full-time permanent
> salary. I would also like to know about the implications of breaching
> the contract early under different circumstances.
>
> Can anyone give an example or point us to the right URL?

I can't answer the contract breach question, but here are some figures
I worked out last year when looking to change jobs:

\$30/hr = \$1268.35 take home per fortnight
\$40/hr = \$1622.33 take home per fortnight
\$50/hr = \$2056.31 take home per fortnight
\$60/hr = \$2406.30 take home per fortnight
\$70/hr = \$2742.77 take home per fortnight
\$80/hr = \$3079.23 take home per fortnight
\$90/hr = \$3415.70 take home per fortnight
\$100/hr = \$3752.17 take home per fortnight
\$110/hr = \$4066.68 take home per fortnight
\$120/hr = \$4374.39 take home per fortnight

Those figures are based on 213 working days per year (-12 public
holidays, -20 days leave, -10 days sick leave and -5 days training)
and on the following amounts coming out of your pre-tax hourly rate:

9% superannuation
3% management fee (can vary between agencies)
\$3500 training/year (I should probably have this coming out post-tax)

Then income tax and the medicare levy comes out to give you the net salary.

Here's a worked example:

213 work days per year
\$30/hr
\$240 daily rate
\$240 * 213 = \$51,120.00
\$51,120.00 * 9% super = \$4,600.80
\$51,120.00 * 3% mgmt = \$1,533.60
training = \$3,500
expenses = \$4,600.80 + \$1,533.60 + \$3,500 = \$9,634.40

gross salary PA = \$51,120.00 - \$9,634.40 = \$41,485.60
tax on \$41,485.60 = \$7,795.68 (\$2,850 plus 30c for each \$1 over \$25,000 **)
medicare levy = \$gross salary PA * 0.015% = \$622.28
net salary PA = \$gross salary - \$tax - \$medicare levy = \$33,067.64

monthly salary take home = \$net salary / 12 = \$2,755.64
fortnightly salary take home = \$net salary / 365 * 14 = \$1,268.35

** this calculation may now be out of date -- see ato.gov.au

There are probably a couple of (hopefully minor) flaws in the formula
but I found it to be pretty accurate. I'd appreciate feedback from
anyone who spots a flaw.

FWIW I ended up taking a perm job :-)

cheers,
Dale
```