Pro Rata Calculator
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How to Calculate Pro Rata Hours and Salary
Understanding "pro rata" is essential for both employers and employees when negotiating part-time contracts. The term comes from the Latin pro rata, meaning "in proportion." In the context of employment, it ensures that part-time workers receive fair pay and benefits proportional to what a full-time employee would receive for the same role.
The Pro Rata Formula
To calculate pro rata entitlements, you first need to determine the Full-Time Equivalent (FTE) ratio. This ratio represents the portion of a full-time job that the part-time hours represent.
Step 1: Calculate the FTE Ratio
Divide your contracted part-time hours by the company's standard full-time hours.
FTE = Part-Time Hours / Full-Time Hours
Step 2: Calculate Pro Rata Salary
Multiply the full-time annual salary by your FTE ratio.
Pro Rata Salary = Full-Time Salary × FTE
Real-World Example
Let's assume a company offers a standard full-time role at 40 hours per week with an annual salary of $60,000. You are looking to work 24 hours per week.
- FTE Calculation: 24 ÷ 40 = 0.6 (or 60%)
- Salary Calculation: $60,000 × 0.6 = $36,000
In this scenario, your gross annual salary would be $36,000.
Pro Rata Holiday Entitlement
Holiday pay is also calculated on a pro rata basis. If a full-time employee gets 28 days of holiday per year, a part-time employee working 0.6 FTE would be entitled to:
28 days × 0.6 = 16.8 days
Most employers will round this up to the nearest half-day or full day, depending on company policy.
Why Calculation Accuracy Matters
Ensuring accurate pro rata calculations is vital for compliance with labor laws. Underpaying part-time staff by failing to calculate the correct pro rata rate can lead to legal disputes and low morale. Conversely, understanding these figures empowers employees to negotiate fair compensation for reduced hours.