1. What is the Permanent Salary to Contract Rate Conversion?

This calculation converts an annual permanent employment salary in the Philippines to an equivalent hourly contract rate, accounting for typical benefits and overheads in contract work.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• 2080 — Standard work hours per year (40 hours/week × 52 weeks)
• 1.2 — 20% premium to account for benefits and overheads not included in contract work

Explanation: This formula provides a baseline for converting permanent employment compensation to contract rates in the Philippine context.

3. Importance of Contract Rate Calculation

Details: Accurate contract rate calculation ensures fair compensation when transitioning from permanent employment to contract work, accounting for lost benefits and additional expenses.

4. Using the Calculator

Tips: Enter your current or desired annual permanent salary in Philippine Pesos (PHP). The calculator will output the equivalent hourly contract rate.

5. Frequently Asked Questions (FAQ)

Q1: Why multiply by 1.2?
A: The 20% premium accounts for benefits (SSS, PhilHealth, Pag-IBIG) and job security that permanent employees receive but contractors don't.

Q2: Is 2080 hours standard in the Philippines?
A: Yes, this assumes 40-hour work weeks for 52 weeks, though actual work hours may vary by company.

Q3: Should I adjust the rate for my specific situation?
A: Yes, consider adjusting based on your skills, demand, and whether the contract provides other benefits.

Q4: Does this account for taxes?
A: No, this is a gross rate calculation. Contractors are typically responsible for their own tax payments.

Q5: Is this applicable for all industries?
A: While the formula provides a baseline, some specialized fields may command higher contract rates.