Whenever a contracted employee, that usually enjoys a monthly or contractual rate, works for a string of days that does not complete a wage cycle stipulated on the contract, a prorated salary is usually given as compensation for the work done during those days. The salary given to you will be based on a computation for your daily rate in relation to the rate stipulated on your contract, whether it is monthly or project based. To make everything more understandable, let’s say that you are given $2000 for a total of 26 days of work every month. Now, for this month, you only worked 10 days instead of the total 26 days you are contracted to work for. Obviously, your employer is not liable to pay for the total amount of $2000 (unless agreed upon in the contract). So since, you only worked 10 days, you should only receive 10 days worth of salary. Now, to compute this, here is a short process you can follow using the example given.
- Determine your daily rate. To compute your prorated salary, you will first need to determine your daily work rate. This is actually the rate given to you for work on a daily basis. Basically, all you need to do is divide the total amount for a whole month’s work with the number of days there is in a work month. This should exclude your normal off days. For this example, using the $2000 for 26 days of work each month, divide $2000 by 26. Through this calculation, you will get a result of around $77 per day. This is now your daily rate.
- Multiply it by the number of days you worked for. Now that you determined that your daily rate is $77, take that number and multiply it by the number of days you worked for in a given month or outside your contracted work period. In this case, use the example of 10 days. 77 multiplied by 10 equals to 770. Hence, the prorated salary for 10 days of work is $770. So, your employer will only be entitled to pay you $770 for those 10 days.
- Break it down. The same process can be done to compute prorated salaries on an hourly basis. You can basically repeat the process you did previously by determining your daily rate and then divide the result by the number of hours you worked each day. Through that process, you will get your hourly rate. For example, if you use the $77 daily rate as your basis and you usually work 8 hours each day, then 77 divide by 8 will come to around 9.60. So your hourly rate is $9.60. Now to prorate your salary if say you worked for a total of 30 hours in a given period, then you will be entitled to $288 from the computation of 9.60 multiplied by 30.
Knowing how to compute for prorated salaries is quite critical in running a business since you never want to be paying more than what your employees work for. At the same time, it is a crucial tool to pay an employee his increased wages should the change of compensation changes mid-month or year.