Most of us have heard the term "pro rata", generally when applying for a new job. So what does the phrase actually mean? So, put simply, a pro rata wage is calculated from what you would have earned if you were working full time. Your pay would be proportional to the wage of someone working more hours. One of your colleagues is working full time, on a 40 hour contract. So for the example above, this would look as follows:.
In other words, figure it out using the hourly rate rather than as a percentage of a full time salary. The statutory minimum holiday time is 5. If you work three days a week rather than five, for example, your holiday entitlement can be calculated as below:. When you offered an employee a salaried position, you told them the gross amount they would be paid for that year.
With that in mind, it's fairly simple to find how much that salary translates to an hourly rate. Check out our recommendations for the best payroll software.
Here's how you would calculate Todd's hourly rate if he worked 40 hours a week:. However, if he missed a day and a half in one week, you would need to prorate his salary based on that missing time.
Here's the calculation for this:. If you wanted to prorate a salary by a few missed days, you'd swap the hourly rates for daily ones. So, if a person normally works five days and they lose a day each week, you will adjust the calculation to reflect those changes instead of hourly changes.
Key takeaway: To calculate a prorated salary, basically, you need to multiply the employee's hourly wage by the number of missed hours. This entails a few simple equations if you don't already know their hourly wage.
Salaried employees occupy a special niche within federal law. However, they are still protected under the FLSA and cannot have their pay lowered. There are exceptions to the rule, of course. Along with the previously mentioned reduction in days or hours worked, there are several reasons why an exempt employee would receive a prorated salary:.
While it makes sense that a salaried worker would take a reduced paycheck if their worked hours reduced outside of normal circumstances, some possible reasons for that reduction deny you the ability to offer a prorated salary. In instances where an employee is called away from work to perform a civic duty — like serving as a juror, testifying as a witness in a criminal case, or fulfilling military obligations — you cannot reduce their salaried pay.
You can, however, deduct the lost time from your taxes as an offset. Deductions are only allowed if you have a way to pay that employee those lost wages or the worker in question takes any unpaid leave per the Family Medical Leave Act. Pay reductions are also permitted if the employee is hit with unpaid disciplinary action or punishment for a safety violation that forces them to be out of work for at least a full day. How to Calculate a Prorated Salary for Employees. Andrew Martins.
You might need to prorate an employee's salary for multiple reasons. When you do, make sure you do it right, following these calculations. When changes occur in a salaried employee's availability, you will likely want to negotiate a prorated salary. Since this only pertains to salaried workers, you do not need to worry about prorating an hourly employee's pay. Employers prorate salaries for several reasons and understanding how they intend to do so in advance can open up opportunities to negotiate your prorated salary or other benefits.
In this article, we will discuss what a prorated salary is, situations in which you will likely receive a prorated salary and how you can discuss your prorated salary with your employer. A prorated salary is when an employee is owed the amount of their salary proportionate to the number of days that were worked. For example, if an employee was hired in the middle of a pay period, their first paycheck would reflect the rate of their full-time salary but reduced in proportion to the days that were worked.
There are several situations in which an exempt employee will receive a prorated salary. They include:. Related: Salary vs.
Hourly Pay: What Are the Differences? To calculate your prorated salary, you must first figure out the hourly rate. Divide the annual salary by the number of hours you work each week. Next, multiply that by the number of days worked in the pay period. When calculating your prorated salary, ignore any hours you will not be working because of vacations or sick leave. Typically these are benefits that an employer includes as paid time off. While your prorated salary is determined based upon the salary you negotiate upfront, it is important to discuss key aspects of your benefits package with employers before accepting a position.
For example, many employers have a probationary period for new hires and employees who take time off before that probationary period ends will have to take time off unpaid. That time varies among employers and can be negotiated upfront.
Some employers may also prorate annual bonuses based on when the employee started. If an employee accepted a position halfway through the fiscal year, for example, the employer may prorate the bonus and give only half of the bonus.
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