Prorate

What is Prorate?

Prorate means to calculate salary or benefits proportionally based on the number of days an employee has worked during a payroll period. It ensures accurate pay computation when employees join, resign, or take unpaid leave mid-month.

Key Features:

Formula:

• Prorated Pay = (Monthly Salary ÷ Total Working Days) × Days Worked.
• Use Cases: New hires, resignations, leave without pay (LWP).
• Automation: Payroll systems calculate proration automatically during salary processing.
• Impact Areas: Salary, incentives, and leave accruals.

Example

If an employee joins on April 10 with a ₹60,000 monthly salary and 30 working days, pay = ₹60,000 ÷ 30 × 21 = ₹42,000.

Why Proration Matters:

It ensures fair and accurate salary disbursement, reflecting actual work duration and compliance with wage laws.