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Calculating hourly costs for full-time employees
Calculating hourly costs for full-time employees

How to calculate the hourly cost for your full-time, salaried employees

Nicole avatar
Written by Nicole
Updated over a week ago

When adding a new employment contract for an employee in Runn, you are required to enter an hourly cost. We use this cost to show you financial forecasts on the Planner, including a forecast of your project billings, labour costs and gross project profits. 

We also use this cost to generate insights for the upcoming 4 weeks for your clients, projects and people. 

To calculate the hourly cost of an employee you need:

  1. The employee's annual working hours

  2. The employee's annual cost


We've created a handy Google spreadsheet that you can use to calculate your employees' hourly cost. 


1. How to Calculate the Annual Working Hours

To calculate your employee’s annual working hours, multiply the number of hours per week the employee is working by the number of weeks per year, then subtract any paid leave and stat holidays. 

Here's an example:

  • In the British Columbia, Canada (BC), the average, full-time, salaried employee works 37.5 hours per week. 

  • Minimum paid leave in BC is 10 days after 12 months and 15 days after 5 years of consecutive employment. (See BC employment standard act)

  • BC has 5 federal and 5 provincial stat days. (Stat holidays in BC fact sheet)

Note: Your company might be paying additional holidays so please adjust the above numbers accordingly

2. How to Calculate the Employee's Annual Cost

To calculate your employee’s annual cost, take their annual salary and add any employer paid benefits and direct overhead such as computers or phones. 

Here's an example:

  • In BC, Canada Pension Plan (CPP) contributions for 2019 are 5.1 % of your employee’s salary.

  • Employment insurance is 1.4 x the employee’s contribution. (2019 employee contribution is 1.62%) For an employee with a salary of $100.000, this would be 100000 x 1.62% x 1.4 = $1,620.

  • Add any cost for computers and phones using straight line depreciation. E.g. assuming you replace computers every 3 years and a cost of $3000, that would be $1000 per year. 

Annual Costs = Annual Salary + Pension Plan Premiums + Employment Insurance + Computers / Phone etc. + Any other benefits you provide

Note: Your company might be paying additional benefit, so make sure to include those too.

Bringing it Together: Calculating the Hourly Cost

Hourly cost = employee's annual cost / annual working hours

Still have questions? We're happy to help! 


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