Calculating Prorated Compensation
Prorated compensation ensures fair payment for contractors and employees who start or leave in the middle of a pay period.
Prorated calculations for new joiners apply to Fixed Contractors and Direct Employees only.
Prorated calculations for terminations apply to Fixed Contractors only.
Prorated settings must be defined during contract creation or edited before the first payment is processed.
Fixed Contractors
Prorated compensation for fixed contractors depends on the payment frequency and whether proration is based on working days or calendar days.
Frequency of Payments | Calculation |
Every month |
Monthly rate: Full monthly payment Working days: Total business days in the month Calendar days: Total calendar days in the month Days worked: Actual days worked in the prorated period
Working days option
Daily rate = Monthly rate / Working days = 1000 / 20 = 50 Total to pay = Daily rate × Days worked = 50 x 10 = 500
Calendar days option
Daily rate = Monthly rate / Working days = 1000 / 30 = 33.33 Total to pay = Daily rate × Days worked = 33.33 x 10 = 333.33
|
Twice a month |
Bi-Monthly rate: Total bi-monthly payment amount Half-month working days: Total of working days within half of the month. Days worked: Actual days worked in the prorated period
Working days option
Daily rate = Bi-Monthly rate / Half-Month working days = 1000 / 10 = 100 Total to pay = Daily rate × Days worked = 100 x 5 = 500
Calendar days option
Daily rate = Bi-Monthly rate / Half-Month calendar days = 1000 / 15 = 66.66 Total to pay = Daily rate × Days worked = 66.66 x 10 = 666.66
|
Every other week | Bi-weekly rate: Total bi-weekly payment amount Bi-weekly working days: Total of working days within 2 weeks (10 days). Days worked: Actual days worked in the prorated period.
Working days option
Daily rate = Bi-Weekly rate / Bi-Weekly working days = 1000 / 10 = 100 Total to pay = Daily rate × Days worked = 100 x 5 = 500
Calendar days option
Daily rate = Bi-Weekly rate / Bi-Weekly calendar days = 1000 / 14 = 71.43 Total to pay = Daily rate × Days worked = 71.43 x 10 = 714.30 |
Every week |
Weekly rate: Total weekly payment amount Week working days: Total of working days within a week (5 days). Days worked: Actual days worked in the prorated period
Working days option
Daily rate = Weekly rate / Week working days = 1000 / 5 = 200 Total to pay = Daily rate × Days worked = 200 x 5 = 1000
Calendar days option
Daily rate = Weekly rate / Week calendar days = 1000 / 7 = 142.86 Total to pay = Daily rate × Days worked = 142.86 x 10 = 1428.60
|
Proration Across Multiple Months
When a contractor’s pay period spans multiple months, calculate the daily rate separately for each month based on that month’s working days. Then, multiply by the number of days worked in each month and sum the results.
Example
Start date: 15 June
Payment date: 15 July
Monthly Rate: 1,000
Step-by-Step Breakdown
June Calculation
Working Days in June: 20
Days Worked in June (from 15 June to 30 June): 10
Daily Rate (June): 1,000 / 20 = 50
Total Pay for June: 50 × 10 = 500
July Calculation
Working Days in July: 22
Days Worked in July (from 1 July to 15 July): 12
Daily Rate (July): 1,000 / 22 = 45.45
Total Pay for July: 45.45 × 12 = 545.45
Total Payment = 500 (June) + 545.45 (July) = 1,045.45
Direct Employees
For direct employees, only monthly payments using the calendar days option are supported. Both salary and allowances are prorated.
Frequency of Payments | Calculation |
Every Month | Monthly salary: Total base salary + prorated allowances Month's calendar days: Total number of days in the month. Days worked: Number of calendar days from start date.
Daily salary = Monthly rate / Month's calendar days = 1000 / 30 = 33.33 Total to pay = Daily salary × Days worked = 33.33 x 10 = 333.33 |
Proration is applied only if the employee has not completed a full calendar month. If the start date is more than one full calendar month in the past, no proration is applied.