True hourly cost of overtime.

Salaried employees working unpaid overtime see their effective hourly rate drop. Working 50 hours instead of 40 contracted hours = 25% extra time for same pay = 20% lower hourly rate. This tool quantifies the gap and helps employees understand the true cost of 'just one more hour' of unpaid work.

50,000 salary, 40 contracted hours × 48 weeks = 1,920 hours. Working 50 hours actual = 2,400 hours. Contracted hourly: 26.04. Actual hourly: 20.83. 20% lower than contracted. 480 unpaid overtime hours × 26.04 = 12,500 of value worked but not paid annually.

The math reveals what 'putting in extra hours' really costs. Employees who consistently work 10+ hours overtime are effectively giving the company 25%+ free labour. Whether worth it depends on: career progression value, learning, future earning potential. But it should be a conscious choice, not unconscious habit. Many employees would rather work 40 hours and earn 40k than 50 hours for 50k.

Quick example

With annual salary of 50,000 and contracted hours per week of 40 (plus actual hours per week of 50 and weeks worked of 48), the result is 20.83. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Annual Salary, Contracted Hours per Week, Actual Hours per Week, and Weeks Worked. Hours and hourly rate both appear to matter equally, but in practice the rate is the bigger lever because it applies to every hour. A modest rate uplift beats a modest hour increase almost every time.

What's happening under the hood

Actual hourly = salary ÷ (actual hours × weeks). Contracted hourly = salary ÷ (contracted × weeks). Lost value = overtime hours × contracted hourly. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

Using this in pay negotiations

Knowing the exact figure behind a headline rate gives you specific numbers to anchor to in conversations about pay. "The difference is £X per month after tax" lands harder than "a couple of grand a year". Concrete numbers move decisions.

What this doesn't capture

Tax bands, pension contributions, student-loan deductions, and benefits-in-kind sit outside this calculation. The figure is the headline; your actual position depends on local tax rules and personal circumstances. Pair with a dedicated take-home calculator for the full picture.