Contents of this article are applicable to the following users
Tier: NA
Product: PayrollAny
Platform: Web
Access Level: Owner
When a monthly salaried staff works an incomplete month (mid-month joiner, mid-month leaver, or has compensation changes in the middle of the month), their salary needs to be prorated accordingly. This article will explain how this proration for an incomplete month of work can be automatically done in PayrollAny.
This guide will cover the following:
Proration formula & setup
We use the MoM formula for proration, defined as such:
Pay for an incomplete month of work =
(Monthly gross rate of pay) / (Total number of working days in that month) x Total number of days the employee actually worked in that month (MoM Reference)
Monthly gross rate of pay
Monthly gross rate of pay is used to calculate no pay leave deductions and work for incomplete month. It is the sum of monthly basic rate of pay + all allowances with "allow proration & include in monthly gross rate of pay" turned on.
All salaried staff by default have their basic monthly salary already setup as proratable.
Additionally, you can create a new custom pay item and select that as proratable for this calculation to apply. You may refer to this page to learn which pay items are proratable.
An example is transport allowance, fixed amount type, that is proratable. See more on how to set up pay items here.
Total number of working days in that month
This is based on the MoM table of working days (MoM Reference), and the 5 / 5.5 / 6 working day setting defined for each staff.
Total number of days the employee actually worked in that month
This only changes for months that have mid-month joiners, mid-month leavers, or mid-month compensation changes. If a staff within a particular payroll period does not fall into either of the above 3 categories, this value will just be the same as “Total number of working days in that month”, and effectively no proration will happen.
This is calculated based on the “Prorate salary based on” setting:
If “Fixed working days per week” is chosen, the number of days worked is counted the same way how working days is counted, but just applied to that shorter time range.
If “Attendance data” is chosen
For payruns with attendance data, number of days worked follows our current timesheet days worked definition of:
Number of days with at least 1 shift with clock-in record + number of working day leaves taken.For payruns without attendance data, number of days worked follows the “Fixed working days per week” setting
In general, the recommendation here is for office staff, choose “Fixed working days per week”. For outlet staff, choose “Attendance data”.
Examples of incomplete month proration
The following are examples of how incomplete month proration is applied in different scenarios:
Mid-month joiner
Setup
To identify new joiners efficiently, it is recommended to enter the join date in the My Team > staff's name > Work Information.
When making edits to the payroll, you could differentiate new joiners, and it will automatically prorate the calculations accordingly.
Calculation
From the example above:
Working days per week settings: 5 days (Mon-Fri)
Prorate salary based on: Fixed working days per week
Join date: 8 December 2023
Payroll’s Timesheet period: 01 Dec 23 - 31 Dec 23
Monthly wage: $5,500/month
Calculation:
Working days (1 Dec-31 Dec) = 21 days
Days worked (8 Dec-31 Dec) = 16 days
Prorated salary = wage x days worked / working days
= $5000 x 16 / 21 = $4,190.48
Mid-month leaver
Setup
To identify resignee efficiently, it is recommended to enter the contract end date in the My Team > staff's name > Work Information
Calculation
Similar to the mid-month joiner above.
Mid-month compensation changes (promotions / transitions)
Setup
For the case of promotion or transition that cause compensation changes. You can update the compensation accordingly in the My Team > staff's name > Current wage setup. Then specify the effective pay period.
Note: After saving, if the effective date is in the future, it will only show the “current wage setup”, and it will change upon the effective date
When making edits to the payroll when there are any compensation changes in mid-month. The system will prorate for all of the periods.
Calculation
From the example above:
Working days per week settings: 5 days (Mon-Fri)
Prorate salary based on: Fixed working days per week
First compensation period: 1 Jan - 14 Jan 2024 @ $5500/month
First compensation period: 15 Jan 2024 - onwards @ $6000/month
Payroll’s Timesheet period: 01 Jan 24 - 31 Jan 24
Calculation:
Working days (1 Jan-31 Jan) = 23 days
Days worked for period 1 (1 Jan-14 Jan) = 10 days
Days worked for period 2 (15 Jan-31 Jan) = 13 days
Prorated salary period 1 = wage x days worked / working days
= $5500 x 10 / 23 = $2,391.30
Prorated salary period 2 = wage x days worked / working days
= $6000 x 13 / 23 = $3,391.30
Monthly Total Number of Working Days in 2024
Here's a useful table based on MoM recommendation to help you calculate the number of working days in 2024 on a monthly basis, based on your company's working schedule.
Note:
The total number of working days per month includes public holidays that fall on a normal working day but excludes rest/off and non-working days.
Half-day work (5.5 days per week) is scheduled on a Saturday, while Sunday remains the default rest/off day.
The 6th working day falls on a Saturday, and Sunday is still considered the default rest/off day.