38 vs 40 Hours: Why Your 'Hourly to Salary' Maths Is Probably Wrong

Converting an hourly rate to an annual salary in Australia by multiplying by 40 hours instead of 38 overstates your annual figure. The National Employment Standards define full-time ordinary hours as 38 a week, and most generic pay calculators default to the US convention.

That is the error everyone writes about. There is a second one underneath it that survives even after you fix the first, and it is the more interesting of the two, because it means the correct hourly rate multiplied by the correct number of hours still gives you the wrong answer.

Why 38 hours, not 40

Under the National Employment Standards, maximum weekly hours for a full-time employee are 38, plus "reasonable additional hours" where genuinely required. Most awards and enterprise agreements set ordinary hours at 38 for full-time roles. Forty is the US standard, and it has bled into tools that were not built with Australian employment law in mind.

What the two-hour gap is worth

At the national minimum wage of $26.44 an hour:

• 38-hour week: 38 × $26.44 × 52 = $52,245
• 40-hour week: 40 × $26.44 × 52 = $54,995
• Difference: $2,749.76 a year, same rate, same person, same job

Except that difference is gross, and nobody is paid gross. It is extra income stacked on top of income you already have, so it is taxed at your marginal rate rather than your average one. Run both figures through the tax scales and the $2,749.76 becomes $1,828.59 in your account — you keep about 66% of it.

That is worth holding onto whenever someone quotes you a gross annual figure as though it were a benefit. It is not a reason to ignore the gap. It is a reason to size it properly before you negotiate over it.

The second error: $26.44 an hour is not $1,004.72 a week

Here is where it gets genuinely counterintuitive, and it is the part almost nothing on the internet gets right.

The Fair Work Ombudsman publishes the national minimum wage as $26.44 per hour or $1,004.90 per week. Both figures, together, from the same decision.

Now multiply: 26.44 × 38 = $1,004.72.

That is not $1,004.90. It is 18 cents short, every week, and over a year the derived figure misses by $9.36. The published weekly rate is not the published hourly rate times 38, and it never was.

The reason is that the Fair Work Commission's annual wage review sets these as separate published figures, and the hourly rate is rounded to the cent. A rate that lands anywhere between $26.4447 and $26.4499 an hour prints as "$26.44", and $1,004.90 ÷ 38 is $26.4447. The cent you cannot see is the cent that goes missing when you multiply it back up.

Which means the worked example higher up this page is wrong. The $52,245 figure is what you get by multiplying the published hourly rate by 38 by 52. The actual full-time-equivalent annual minimum, built from the published weekly figure, is $52,254.80. We left the derived version in place because it is the number every converter will hand you, and seeing the two side by side is the whole point.

And the rounding does not always go the same way. The FWC's 2026 review also set an entry-level floor of $25.74 an hour or $978.10 a week for the first six months of employment. Multiply that one out and 25.74 × 38 = $978.12 — two cents over the published figure. You cannot even learn a direction to correct in. You have to take the published number.

The practical rule

Use whichever figure your pay is actually set in, and never convert between them to check compliance.

• Paid an hourly rate? Compare it against the published hourly floor.
• Paid a weekly or annual salary? Compare it against the published weekly or annual floor.

Converting first and comparing second introduces a rounding error of a few dollars a year — small in absolute terms, but pointed in exactly the wrong direction. It is entirely possible to be paid lawfully and have a naive conversion suggest you are underpaid, or the reverse.

The 52-week assumption is also a convention

Multiplying a weekly rate by 52 is the standard shorthand, and it is not quite a year. A year is 52.1786 weeks on average, once leap years are counted. At the minimum weekly wage that difference is worth about $179 a year.

More concretely: a weekly-paid worker gets 53 pay days in some calendar years rather than 52, purely because of where the days fall. In a 53-pay-day year the minimum wage grosses $53,259.70 rather than $52,254.80. Nothing changed about the job.

This is why annual salary figures quoted from hourly rates should be treated as approximations even when every input is right. If you need an exact annual figure, count the pay periods in the actual year.

The mistake also runs in reverse

The same error shows up when people back-calculate an hourly rate from an advertised annual salary. A role advertised at $60,000 a year:

• Over 38-hour weeks: $60,000 ÷ 52 ÷ 38 = $30.36 an hour
• Over 40-hour weeks: $60,000 ÷ 52 ÷ 40 = $28.85 an hour
• Difference: $1.51 an hour, a bit over 5%

That 5% matters most when you are checking an advertised salary against an award rate. Using the wrong divisor can make a role look like it clears the floor when it does not — and a salaried role still has to leave the employee no worse off than the award would, hour for hour.

When 40 hours is actually correct

Forty is not always wrong. Some workplaces genuinely roster a 40-hour ordinary week, particularly where an enterprise agreement sets it, or where a role's base structure absorbs paid overtime. The point is not that 38 is universally right. It is that you should use your actual contracted ordinary hours and check that any calculator you use is not quietly assuming otherwise.

If your contract says 38 and you consistently work 40, that is not a different standard week — that is two hours of additional hours a week, which may attract overtime or may need to be reasonable under the NES. Those are different questions with different answers.