CashMost of you know your net pay, as you can read that clearly from your pay stub, so there is no great mystery here.

However, there may be several other hidden and quite variable financial deductions which can make a significant negative impact on your actual rate of pay for a certain job versus what’s written in your contract.

This not only means that you may have a lower rate of pay in real terms than the contract says, but your rate of pay may no longer be worthwhile, considering the job you do and the effort you put in.

Unpaid Overtime

One of the biggest culprits for reducing your actual rate of pay versus contractual rate of pay has to be unpaid overtime. The U.K. and the U.S. work environments have traditions of long work hours. Research from Gallup in August of this year shows that in the U.S., the “40-hour work week is actually longer by 7 hours.” Also, it seems that 18 percent of employees regularly work over 60 hours a week, 21 percent work 50-59 hours, and 11 percent work 41-49 hours.

This may, of course, be bad for health, but it becomes a monetary problem if you are a salaried employee or someone who doesn’t receive paid overtime. For example, that 18 percent of employees working over 60 hours a week, who may be on a 40-hour contract without paid overtime, are actually earning a third less per hour than their contracts state. This means that, if you are on $20/hour contractually, you are actually earning just $13.33/hour for your work.

Now, this doesn’t have to be a problem in itself. You may still find this to be a tolerable amount of pay, given the intrinsic/non-financial rewards that you receive in your work — e.g., a sense of purpose, social and ethical value, or satisfaction in your work.


Both your commuting time and costs can severely impact your actual rate of pay versus contractual rate of pay, too. I mean, commuting two hours a day (average daily commute time is 50 minutes) means you are commuting an hour a day over the average and an additional 20 hours a month over the average, which also can also decrease your actual hourly rate versus contractual rate by about 10 percent. When you add in additional work-related costs, like childcare, and additional stress relieving activities, your actual rate of pay may be reduced further.

What’s to Be Done?

If you haven’t done so already, I think it makes sense to stop and take the time to work out your actual rate of pay versus your contractual rate of pay to see where the land lies.

You may find that there is not much discrepancy, or you may find a large negative discrepancy between your actual rate of pay and contractual rate of pay. This doesn’t mean that you have to take the nuclear option and walk out, as this are many practical routes you can take.

It may be that, given the intrinsic/non-financial rewards the job brings, you are happy to keep working at this rate. Alternately, it could be an opportunity to request a pay raise or a change to your working conditions to increase your actual rate of pay — such as working fewer hours or working from home. It could also be time for you to consider a new career or role.

There are many options open to you, but the most important option is to take the opportunity to consider your actual rate of pay versus contractual rate of pay in the first place.

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