How to Calculate Hours Worked Per Year (Simply Explained)

How to calculate working hours

Understanding how many hours you work in a year could make a huge difference in stabilizing your work-life balance.

From taking enough breaks to having more personal time, current work conditions aren’t the best for employees and freelancers.

Workers, especially those who work from home, are hardly finding time to check how much time they spend at work in a year. We’ve become too focused and sucked in that we hardly take breaks or even wholly disengage from work.

That’s why it’s important to get your hands on data such as annual working hours to put things in perspective.

Companies can also take advantage of calculating annual work hours. From perfecting their budget to assessing their workforce, there’s much to glean from evaluating average hours worked in a year.

Explaining Working Hours

Working hours involve the number of hours employees spend working. But it’s not the same for everyone.

Some workers are paid by the hour and others are paid monthly or weekly (full-time workers).

There are others though, who are paid on a contract basis. That is, upon fulfillment of a project or duty.

For example, a consultant may be paid a one-time fee to deliver on a project. Athletes are also typically paid weekly, without deductions for days off.

Then, there are salaried workers in countries like the US who are paid their wages as long as they work the required hours each week.

How to Calculate Working Hours Per Year: A Breakdown

Full-time employees who work the typical 9 to 5 schedule work 8 hours per day. That means they work 40 hours each week.

Since one year has 52 weeks, they’d work 2,080 hours per year.

While that may solve the equation for the average worker, it’s not that simple.

People almost never work the entire 40 hours per week for 52 weeks.

Organizations account for time off, whether paid or unpaid, throughout the year. These time off periods cover paid holidays, sick days, absences, and paid time off.

So, if you work 2,080 hours a year, then you’re likely missing out on some benefits and should chat with your employer.

For example, if you have 12 PTO days and the regular 8 paid holidays, you’ll have worked 1,920 hours for the year.

Still, paid time off and holidays vary from company to company. You may also want to factor in unpaid sick days in some organizations, which employers are mandated by law in some countries to recognize.
When every time off work is accounted for, the annual average will reduce even further.

How the Average Working Week is Calculated

Calculating your average working week allows you to easily determine how many hours you work in a year.

For some countries, it’s as easy as multiplying hours worked each day by 5. For others, it’s quite different.

You have to consider that some countries don’t use the traditional 5-day workweek and others adopt different systems for calculating working hours.

For example, the UK uses rules outlined in the Working Time Regulations to help workers determine their average working hours per week.

According to the rules, UK workers use a 17-week rolling reference period to calculate average hours worked each week.

It works by adding up all your work hours during the last 17 weeks and then dividing the result by 17.

If you were on leave or absent due to illness during the last 17 weeks, the reference should start earlier to make up for the days you didn’t work.

Employees can use a 26-week reference period instead if there’s an emergency. Also, workers like caretakers, security guards, and those who travel long-distance can use the 26-week rolling reference period.

Paid Holiday, Paid Time-Off, Unpaid Time-Off

Whether you’re an employee or employer, understanding the difference between paid time off and paid holidays is crucial. These off days are critical to calculating annual working hours.

Some countries, like the US, don’t have federal laws mandating employers to provide paid time off. That said, organizations typically offer these benefits to compete for and retain talent.

They provide an average of 10 days of paid time off. These days cover things like vacations, sick days, and personal days.

Paid holiday days include national public holidays set by the federal government. Holidays recognized in the US include:

  • Independence Day – 4 July
  • Juneteenth – 19 June
  • Memorial Day – 29 May
  • Labor Day – 4 September
  • Inauguration Day – 20 or 21 January
  • President’s Day – 20 February
  • Martin Luther King Day – 16 January
  • New Year’s Day – 1 January

Note that private businesses can choose to require employees to show up to work during national holidays.

Unpaid Time Off and How it Affects Working Hours

Companies are obligated under federal and state laws to provide unpaid time off for cases such as illness and other personal obligations.

The United States, under the Fair Labor Standards Act (FLSA), mandates qualified employers to offer qualified employees up to 12 weeks of annual unpaid leave in any of the following events:

  • The birth of a child
  • Adoption or placement of a foster child
  • Provision of care to an immediate family member
  • Illness

However, some companies offer paid maternity and paternity leave of absence when parents welcome new children.

You’d have to account for these periods away from work when calculating yearly work hours.

Steps in Calculating Annual Hours

These steps will show you how to calculate your average hours worked in a year.

What Are Your Weekly Hours?

Start by determining how many hours you work each week.

To do that, multiply your daily average by 5. So, if you work 8 hours a day, that means you work 40 hours per week.

However, if your daily hours fluctuate, take note of your work hours and add them at the end of the week. You can then add everything up and divide by 5 (or the number of days you work in a week) to get your daily average.

After getting your daily average, multiply by 5 to get your weekly hours.

If you work in the UK, you have to use the 17-week reference period to calculate your weekly average. To do that, you have to add up all the hours you worked over the last 17 weeks and divide the result by 17.

If you had to stay off during the last 17 weeks, start from an earlier date to make up for the time off work.

Multiply By 52

Once you’ve calculated your weekly average, multiply the number by 52.

So, for example, 40 hours per week gives you 2,080 hours a year.

Calculate Your PTO

Organizations have different paid time off policies. Some companies choose to combine vacation time and sick leave as paid time off.

Calculating your paid time off involves multiplying the number of days you spend away from work by how many hours you work per day on average.

So, if you have 15 days a year in your paid time off package and you work 8 hours a day, your PTO for the year is

15 x 8 = 120 hours.

Deduct Your Total Time Off From Your Total Annual Hours

Now, add the entire hours you spend off work and then subtract the total from your annual hours.

Here’s an example:

If your PTO is 120 hours, you had 8 paid holidays, and 7 unpaid personal leave days, you have to calculate like this:

120 + (7 x 8) + (8 x 8) = 240 hours.

Subtracting from a total of 2,080 hours gives you 1840 hours.

Using a Time Tracker

Timesheets make work week calculations easier, especially for workers paid by the hour.

These days, time trackers are now a staple of work. Employees use these digital applications to calculate billable hours and monitor employee efficiency.

Time trackers are now so thorough that you can use them to easily check how many hours you and your employee worked an entire year.

The data can be further broken down into months, weeks, and days. You can also use them to calculate PTO and paid holidays.

One of the best time trackers you can use to keep tabs on annual working hours is Traqq time tracking.
The tool allows you to use all its premium features for free if you’re working with fewer than 3 team members.

Facts and a Bit of History About Working Hours

Working hours have changed throughout history. Humans have evolved when it comes to balancing the scales between productivity and quality of life.

Our forefathers generally worked more hours than we currently do, and looking at historical data shows us how far we’ve come.

The typical Monday to Friday, 9 to 5 work arrangement wasn’t always the way to work. Life circumstances and historical events largely determined that schedule.

Humans recorded the highest number of working hours during the Industrial Revolution before revising how much time they put into work.

Data suggests that our ancestors worked about 1,773 hours per year on average during the prehistoric era, and that number rose to 3,346 at the peak of the industrial revolution in the 1840s.

Today, the highest number of working hours per year is the UAE’s 2,735 hours, according to the International Labor Organization.

Working Hours by Developed Economies

Every country has a different work culture, which goes on to affect the average number of working hours.
So, a key point to consider when calculating annual work hours is where you live.

Workers in less developed countries tend to work longer hours than those in wealthier nations. The disparity is largely due to economic infrastructure and the availability of part-time work.

That said, there have been significant shifts in the number of working hours in different countries over the years. While some countries have seen working hours drastically reduce over the decades, others have either leveled off or slightly increased the number of hours they work each year.

For example, Chinese workers went from an average of 1,976 annual working hours in the 1970s to 2,174 hours in 2017. On the other hand, workers in Germany reduced annual work hours to 1,354 in 2017 from about 2,500 in the 1950s.

Source: Our World in Data

Still, some countries record high annual working hours. For example, Mexican workers worked an average of 2,128 hours a year, the highest for any OECD country as of 2022.

Source: Statista

Most companies provide generous paid time off for workers today, allowing them enough time to recharge.

That means, even after subtracting your vacation days, you’re likely paid for the entire 2,080 typical annual work hours if you work 40 hours each work.

That said, some companies will deduct your pay if you take extended sick leave or stay away from work for personal obligations such as providing care for an immediate family member.

So, if you’re calculating how many working hours in a year are paid for, be sure to deduct those unpaid hours.

Importance of Calculating Yearly Working Hours

Calculating hours worked per year is important to employers and employees, especially in organizations where workers are paid by the hour.

Full-time employees who have a fixed work schedule can work extra hours occasionally without extra pay. That said, additional employee benefits like health insurance and paid time off tend to be justifiable trade-offs.

On the other hand, contract workers don’t get these benefits, so it’s imperative that they’re fully compensated for overtime.

But there’s more to calculating annual work hours for employers and employees than overtime. Let’s go through those benefits.

Understand Your Earning Power

Employees who work by the hour will be able to make accurate estimates of their annual income by calculating how many hours they work in a year.

Having this data can help them make better budgeting plans and saving arrangements. They can create a better outlook for the upcoming year and figure out how to manage finances.

It also puts other things like overtime in perspective.

Breakdown Hourly Rates

Full-time employees can use data from calculating annual working hours to understand how many hours they work each day, week, and month.

These numbers can help make things look clearer. For example, they get to understand if they’re being paid adequately.

Better Use of Leave and Time Off

Your annual working hours can help you understand if taking time off impacted your earnings or if you didn’t take enough time to rest in the course of a year.

It also helps you to take full advantage of all your paid time off and holidays.

That means you have to thoroughly go through your company’s PTO policies to fine-tune your vacation plans for the upcoming year. You also have to consider unpaid time off policies and know when to take those days off.

For companies, calculating annual work hours helps put PTO policies in perspective. They can use this data to create better policies and improve existing ones.

Better Understanding of Workforce and Resources

A company can evaluate its human resource capabilities by looking at annual working hours. These numbers can help them determine how much more workers they may need to handle future projects.
Annual working hours also help them draw better budgets for future fiscal years.

Evaluate Work-Life Balance

Knowing how many hours you work per year can help you create a better work-life balance. Evaluating how much you’re putting into work allows you to determine whether you’re taking enough breaks.
That way, you can start making decisions and resolutions to use up more of your paid time off. You can also commit to going on more vacations.

Plan for Other Activities

Calculating your annual work hours shows how much time you have for your personal life. Looking at the data can help you figure out how to make more time for other extracurricular activities such as exercising, socializing, and even volunteering.

In Conclusion,

While calculating your annual work hours, you should also accommodate for variations in working days per year due to different weekend dates.

So, check for these variations when using estimated work hours for the next year to plan your activities, vacations, goals, and milestones.

Related articles

April 7, 2021

Why Track Non-Billable Hours?

August 14, 2020

Monitor activity levels of remote employees (fastest way) | Traqq

February 9, 2022

10 Online Staff Tracking Apps in 2023