Calculate prorated salary or pro rata pay from the full pay for a period and the calendar days, working days or hours actually worked in it.
Prorate Salary Formula
The following equation is used to calculate the Prorate Salary.
- Where PS is the prorated salary ($)
- S is full gross pay for the exact period represented by the denominator ($)
- DW is payable calendar days, working days or hours under the applicable policy
- TWP is the total days (or hours) in the work period
When proration is permitted, multiply full-period gross pay by payable units divided by total units for that same period and counting basis. Paid leave and other payable time depend on the applicable policy and law.
What Is a Prorated Salary?
Definition:
A prorated salary estimate allocates full gross pay for a stated period in proportion to its payable units. This arithmetic does not determine an employee's actual pay entitlement or authorize a deduction.
How to Calculate Prorated Salary?
Example Problem:
The following example outlines the steps and information needed to calculate the Prorated Salary.
First, determine the total salary. In this example, the employee’s monthly salary is $4,000.
Next, determine the number of days in the pay period. For this example only, assume the applicable policy permits a 30-day calendar denominator.
Then, determine the days worked. Suppose 10 of those 30 calendar days are payable under that same policy.
Finally, calculate the prorated salary using the formula above:
PS = $4,000 × (10 / 30)
PS = $4,000 × 0.3333…
PS ≈ $1,333.33
FAQ
Why would salary be prorated?
Proration may apply to an eligible partial period, such as a qualifying start or end of employment. Fewer worked days or hours do not automatically permit a salary reduction; paid leave and other rules can preserve pay. For example, U.S. salary-basis rules generally require a full weekly salary for covered exempt employees, with specified exceptions. Confirm the rules that apply to your situation.
Does prorating apply to hourly employees?
Hourly employees are typically paid for the exact hours they work, so the concept of prorating is generally more applicable to salaried employees. However, the calculation principle is similar for those with an hourly rate working partial periods.
How do I handle different pay periods?
To prorate salary accurately, identify the total number of workdays (or hours) in the specific pay period, which might be weekly, bi-weekly, monthly, or annual. Then use that figure as the denominator in the prorated salary formula.
