Pay & work guides
How to calculate your real hourly wage
Your contract’s hourly rate describes pay before deductions. Your real hourly wage asks what money is left for the time you actually give to the job.
1. Use money and hours from the same period
Annual figures are useful when overtime, holidays or work costs vary. Start with annual take-home pay after tax, NI and the payroll deductions you want included. Use a completed year’s records or a consistent full-year estimate; do not mix one month’s income with a year’s costs.
2. Subtract the costs caused by working
Include the amounts you personally pay for commuting, parking, extra childcare, work clothing and other work-related spending. Count only the extra cost caused by the job. For food, that might be the difference between your workplace lunch and what you would otherwise spend.
Convert occasional purchases into annual amounts. Three pairs of boots at £60 each cost £180 a year. A £90 drill replaced every three years averages £30 a year for planning, although the purchase-year cash outlay is £90. Use one consistent approach and avoid counting the same cost twice.
3. Count the working time
Use hours physically worked, including overtime and regular unpaid work such as finishing tasks after your shift. Exclude paid leave from physically worked hours. In this site’s headline real-life hourly figure, commuting and normal unpaid lunch breaks are shown separately rather than included in that denominator.
A complete example
- Annual take-home pay: £28,800
- Annual costs of working: £2,400
- Physical work and extra unpaid work: 1,920 hours
(£28,800 − £2,400) ÷ 1,920 = £13.75 per working hour.
These are illustrative inputs, not a tax calculation for a particular salary.
What if I want to include the commute?
You can calculate a separate value per total committed hour. If the example above also involves 240 commuting hours and 120 unpaid break hours, the calculation becomes £26,400 ÷ 2,280 = £11.58 per committed hour, rounded to the nearest penny.
Label these two measures clearly. £13.75 and £11.58 answer different questions; the second is a separate illustration, not the headline figure displayed by this calculator.
Make the result useful
Try changing one thing at a time: fewer commuting days, a different shift pattern or less unpaid overtime. Look at both the money left and the hours recovered. Keep job satisfaction, flexibility and employer benefits alongside the cash figures.
The Annual Calculator brings together pay, work costs and working time. To assess a move, enter both roles in Compare Two Jobs.
This guide explains this site’s own comparison measure. It is not a statutory minimum-wage calculation or a standard definition used by every employer. Example arithmetic checked 12 September 2026.