To get the annual labor cost, you need to add this to the Gross pay, which was 20,800 dollars: 20,800 + 3,900 = 24,700. Let's say the additional costs are 3,900 dollars per year. Other annual costs = Taxes + Insurance + Benefits + Overtime + SuppliesĪfter computing all the above components, we finally arrive at the main labor cost formula, which tells us how much does an employee cost in a year:Īnnual payroll labor cost = Gross pay + Other annual costs Net hours worked = Gross hours – Hours not worked = 2,080 - 120 = 1,960.Īs we stated at the beginning, to get the real labor cost, you need to include all related expenses related to employment. In that case, you can get the yearly days of absence quickly by multiplying by the daily working hours (or weekly hours divided by working days), which is in the present example: For example, suppose a typical employee is absent 15 days a year due to a holiday or illness. If you would like to apply the labor cost calculation on a future employee, you can take the current staff's average number. To estimate the actual number of hours worked in a year, you need to know how many days an employee is absent in a year. Estimate the net hours worked in a year.Gross hours per year = Gross hours per week * 52. Let's say this employee earns 10 dollars per hour, then the gross pay is equal to 2,080 * 10 = 20,800 dollars per year. By multiplying the average number of weeks in a year, you will get the related gross hours per year ( 40 * 52 = 2,080 hours).
Labor hour calculator full#
If your employees work full time, they will typically work 40 hours per week. Our labor cost calculator applies the below procedure explained through an example for a hypothetical restaurant.
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