Key ideas
Salaries
A salary is paid per year (annual).
Monthly = annual salary ÷ 12
Weekly = annual salary ÷ 52
Wages
A wage is paid for each hour worked.
Pay = hours × hourly rate
Overtime
Extra hours paid at a higher rate.
Time and a half: 1.5 × the hourly rate
Double time: 2 × the hourly rate
Commission
A percentage of the value of what someone sells, paid on top of their basic pay.
Gross pay, deductions and net pay
Gross pay = everything earned (basic pay + overtime + commission + bonus).
Deductions = money taken off: income tax, National Insurance, pension.
Net pay = gross pay − total deductions (take-home pay)
Salaries
Sara earns an annual salary of £31 200. How much is she paid (a) each month (b) each week?(2 marks)
Monthly: ÷ 12.£31 200 ÷ 12 = £2600✓1
In plain EnglishThere are 12 months in a year.
Weekly: ÷ 52.£31 200 ÷ 52 = £600✓2
In plain EnglishThere are 52 weeks in a year.
Hourly pay
Liam is paid £11.40 an hour. He works 35 hours a week. How much does he earn in a week?(1 mark)
Hours × rate.35 × £11.40 = £399✓1
In plain EnglishMultiply the number of hours by the rate of pay for each hour. Estimate to check: 35 × £11 = £385, so £399 is sensible.
Overtime
Amy earns £12.60 an hour for a 37-hour week. One week she also works 6 hours overtime at time and a half. Calculate her pay for that week.(3 marks)
Basic pay.37 × £12.60 = £466.20✓1
In plain EnglishFirst work out her normal pay for the 37 hours at £12.60 an hour.
Overtime rate and pay.1.5 × £12.60 = £18.90 an hour6 × £18.90 = £113.40✓2
In plain EnglishTime and a half means 1.5 times her normal rate.
Total.£466.20 + £113.40 = £579.60✓3
In plain EnglishHer total pay for the week is her basic pay plus her overtime pay.
⚠ A common mistake: adding half an hour instead of half the rate. Time and a half is about the pay per hour, not the number of hours.
Commission
Jack sells cars. He is paid £1400 a month plus 2% commission on his sales. In March he sells cars worth £45 000. Calculate his pay for March.(2 marks)
Commission.2% of £45 000 = 2100 × 45 000 = £900✓1
In plain EnglishCommission is a percentage of the value of his sales. Find 2% of £45 000.
Total.£1400 + £900 = £2300✓2
In plain EnglishAdd the commission to his basic monthly pay.
Gross pay, deductions and net pay
Use the payslip to find (a) Mia's gross pay (b) her total deductions (c) her net pay.(3 marks)
| Payslip: M. Brown | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings | Deductions | ||||||||||||
|
| ||||||||||||
| Gross pay | ? | Total deductions | ? | ||||||||||
| Net pay | ? | ||||||||||||
Gross pay: add the earnings.£1850 + £126 = £1976✓1
In plain EnglishBasic pay plus overtime.
Total deductions.£215.40 + £118.60 + £98.80 = £432.80✓2
In plain EnglishAdd up everything in the deductions column: income tax, National Insurance and pension.
Net pay.£1976 − £432.80 = £1543.20✓3
In plain EnglishThis is what Mia actually takes home.
Tom's gross pay is £2400 a month. He pays 6% of his gross pay into a pension, and his other deductions come to £385. Find his net pay.(3 marks)
Pension.6% of £2400 = 6100 × 2400 = £144✓1
In plain EnglishThe pension is 6% of his gross pay, so find 6% of £2400 first.
Total deductions.£144 + £385 = £529✓2
In plain EnglishAdd the pension to his other deductions to get the total taken off.
Net pay.£2400 − £529 = £1871✓3
In plain EnglishNet pay is what is left after all the deductions: gross pay take away total deductions.
Comparing jobs
Job A pays £27 300 a year. Job B pays £13.50 an hour for 38 hours a week. Which job pays more per year, and by how much?(3 marks)
Job B weekly.38 × £13.50 = £513 a week✓1
In plain EnglishJob B is paid by the hour, so first find what it pays in a week: hours × rate.
Job B yearly.52 × £513 = £26 676 a year✓2
In plain EnglishCompare like with like: both per year.
Compare, quoting the numbers.Job A pays more, because £27 300 > £26 676, by £624✓3
In plain EnglishAlways say which job pays more and quote both totals. The difference is £27 300 − £26 676 = £624.
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