Work Hours

What unpaid overtime does to your effective hourly rate

A salary buys a job, not a fixed number of hours. The moment you work more than contracted without extra pay, your effective hourly rate falls — and the drop is larger than most people assume because it compounds across the whole year.

How it works

• Converts a salary into an effective hourly rate using hours actually worked rather than contracted.
• Compares that against the nominal rate implied by a standard week.
• Expresses the extra hours as additional working weeks, which is usually the more legible unit.

annual hours = hours per week × working weeks (~46)
effective rate = salary ÷ annual hours

nominal rate = salary ÷ 2,080

extra weeks = (extra hours per week × working weeks) ÷ 40

Worked example

A 90,000 salary contracted at 40 hours, compared against actually working 45 and 50 hours a week.

1. 40 hours × 46 weeks = 1,840 hours → 48.91 an hour
2. 45 hours × 46 weeks = 2,070 hours → 43.48 an hour
3. 50 hours × 46 weeks = 2,300 hours → 39.13 an hour
4. extra 10 hours a week = 460 hours a year
5. 460 ÷ 40 = 11.5 additional working weeks

Working 50 hours instead of 40 cuts the effective rate by 20% — from 48.91 to 39.13. Those extra hours amount to 11.5 unpaid working weeks, roughly a quarter of a working year given away.

Reading the result

• Use working weeks, not 52. Deducting annual leave and public holidays gives about 46, and using 52 understates your effective rate by roughly 13% in the other direction.
• The comparison that matters when changing jobs is effective rate, not salary. A 100,000 role at 50 hours pays less per hour than a 90,000 role at 40, and the difference is not small.
• Occasional crunch is different from a structural expectation. Two busy weeks a year barely move the figure; ten hours every week is a permanent 20% discount on your labour.
• In many jurisdictions there are legal limits on average weekly hours and mandatory rest periods, and some salaried roles are still entitled to overtime pay. Worth checking your contract and local rules before treating unpaid hours as normal.

Common questions

Is a higher salary with longer hours worth it?

Compute both effective rates before deciding. In the example, 90,000 at 40 hours gives 48.91 an hour; a 100,000 offer at 50 hours gives 43.48. The bigger number is the worse deal per hour, and that is before counting what the extra 460 hours cost you outside work.

How should I count occasional overtime?

Use your realistic average across the year rather than a typical week or a bad one. Four heavy weeks and forty-two normal ones average out to well under an hour extra per week, which barely changes the result. A consistent pattern is what does the damage.