A labour rate is the amount paid per unit of time, usually per hour, to employ people such as operatives, craftspeople and tradespeople, as set out in their employment contract or working rule agreement. Note that the basic labour rate may not reflect the total cost to the employer per hour.
In estimating, the distinction between the basic rate and the all-in rate is important. The all-in labour rate adds the employer’s on-costs, such as National Insurance, holiday pay, pension contributions, insurances, training levies and an allowance for non-productive time, to give the true cost per productive hour. For the QS, labour rates are relevant when:
- checking the build up of tender rates;
- agreeing daywork rates, where a percentage addition is usually applied to a defined basic rate;
- assessing the cost of people within Defined Cost under NEC contracts.
Related terms: All-in Labour Rate, Labour Constant, Daywork, Labour Burden.
