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Salaries, leave loading and bonuses
Converting an annual salary into weekly, fortnightly and monthly pay, comparing a salary with an hourly wage, annual leave loading of 17.5% and bonuses.
A salary is a fixed amount per year, usually paid weekly, fortnightly or monthly. Salaried workers get the same pay whether a week is busy or quiet, but they normally don't get overtime. Most full-time jobs advertised on Seek are listed as a salary, so you need to turn "$\$78{,}000$ a year" into what actually arrives each payday.
Pay periods
For Standard maths, a year has $52$ weeks, $26$ fortnights and $12$ months. Divide the salary by the number of pay periods.
| Paid | Pay periods per year | From a $\$78{,}000$ salary |
|---|---|---|
| Weekly | $52$ | $78\,000 \div 52 = \$1500$ |
| Fortnightly | $26$ | $78\,000 \div 26 = \$3000$ |
| Monthly | $12$ | $78\,000 \div 12 = \$6500$ |
To go the other way, multiply. To change between periods, go through the year: fortnightly to monthly is $\times 26 \div 12$.
Salary or wage?
To compare a job paying by the hour with one paying a salary, put both on the same footing, usually per year.
Job A pays $\$34$ an hour for a $38$-hour week. Job B pays a salary of $\$66{,}000$. Which pays more per year, and by how much?
Money isn't the whole story. A salaried job might expect unpaid extra hours, and a wage job pays overtime when you stay late. That's the kind of thing an extended-response question wants you to mention.
Annual leave loading
Full-time workers in Australia get $4$ weeks of paid annual leave a year. Many awards add leave loading of $17.5\%$ of the normal pay for the leave. The idea dates back to the 1970s: workers on holiday miss out on overtime and penalty rates they would have earned at work.
Kai earns $\$1240$ a week and takes $4$ weeks of annual leave with $17.5\%$ loading. Find his holiday pay.
Set the salary to $\$78{,}000$ and check the table above. Then find a salary where the "4 weeks" mistake costs more than $\$600$ a month.
Set $4$ weeks of leave. Switch the loading off and on. Does the loading depend on the number of weeks of leave you take?
Bonuses
A bonus is an extra payment, often for meeting a target or at the end of the year. It may be a flat amount, a number of weeks' pay or a percentage of salary. A bonus of $3\%$ on a $\$78{,}000$ salary is $0.03 \times 78\,000 = \$2340$. Bonuses are taxed like ordinary income.
Your turn
Nadia is paid $\$2860$ a fortnight. Find her annual salary and her monthly pay, to the nearest cent.
Show the working
Annual: $2860 \times 26 = \$74\,360$. Monthly: $74\,360 \div 12 = \$6196.67$.
Find the weekly pay on a salary of $\$58{,}500$.
$58\,500 \div 52 = \$1125$.
Find the fortnightly pay on a salary of $\$71{,}500$.
$71\,500 \div 26 = \$2750$.
Find the monthly pay on a salary of $\$54{,}000$.
$54\,000 \div 12 = \$4500$.
Why is monthly pay not weekly pay times $4$?
$52$ weeks $\div 12$ months $\approx 4.33$ weeks per month.
Leah earns $\$980$ a week. Find her $17.5\%$ leave loading for $3$ weeks of leave.
Normal pay for the leave: $980 \times 3 = \$2940$. Loading: $0.175 \times 2940 = \$514.50$.
Ben earns $\$1100$ a week and takes $4$ weeks' leave with $17.5\%$ loading. Find his total holiday pay.
$1100 \times 4 = \$4400$, loading $0.175 \times 4400 = \$770$, total $\$5170$. Or in one step: $4400 \times 1.175 = \$5170$.
A job pays $\$31.50$ an hour for a $38$-hour week. What is the equivalent annual amount?
$31.50 \times 38 \times 52 = \$62\,244$.
A worker on $\$65{,}000$ gets a $4\%$ bonus. Find the bonus.
$0.04 \times 65\,000 = \$2600$.
Exam style: Chen's $17.5\%$ leave loading on $4$ weeks' normal pay was $\$826$. Find Chen's normal weekly pay.
Normal pay for the leave: $826 \div 0.175 = \$4720$. Weekly: $4720 \div 4 = \$1180$.
Exam style: A café job pays $\$33$ an hour for $38$ hours a week. An office job pays a salary of $\$64{,}000$. By how many dollars per year does the café job pay more?
Café: $33 \times 38 \times 52 = \$65\,208$. Difference: $65\,208 - 64\,000 = \$1208$.