How to Calculate Prorated Salary for New Join and Resign?
In accordance to the Employment Act, your employer must pay your prorated salary at least once a month and within 7 days after the end of the salary period. There are exceptions for overtime, resignation without notice and other situations.
When an employee joins a company or ceases employment during a month, thereby having an incomplete month of service, the prorated salary payment may have to be apportioned accordingly. The monthly prorated salary employee is based on the number of days in the respective month. The apportionment is made on a calendar month bases because the salary payment is contracted on a monthly basis, whether the month has only 28 days as in February or 31 days as in August the employee gets the agreed monthly salary.
Prorated Salary occurs when an employee:
- commences his/her employment on a day after the first day of the month
- terminates his/her employment on a day other than the last day of the month
- takes no pay leave during the month, or
- is on reservist training during the month.
How often salary must be paid
If you are covered by the Employment Act, your employer must pay your salary at least once a month. They can also pay it at shorter intervals if they choose.
Salary must be paid:
- Within 7 days after the end of the salary period
- For overtime work, within 14 days after the end of the salary period
Formula for Prorated Salary :
(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
Example:
Employee starts work on 13 Jan 2020,5 days a week and his salary is $2000.
Pay for an incomplete month of work =$1304.45 (2000/23*15)
| Calender Month | Calender Days | No. of Sundays | No. of Saturdays | 5 Days/Week | 5.5 Days/Week | 6 Days/Week |
|---|---|---|---|---|---|---|
| January | 31 | 4 | 4 | 23 | 25 | 27 |
| February | 29 | 4 | 5 | 20 | 22.5 | 25 |
| March | 31 | 5 | 4 | 22 | 24 | 26 |
Note:
This table is based on default Monday to Friday work week and the number of working days in the month includes the public holidays that fall on a normal working day but excludes rest days and non-working days.
*Half day work is on a Saturday and Sunday is the default rest day.
**6th working day is on a Saturday and Sunday is the default rest day.
