A prorated salary is a portion of a full annual salary that is paid to an employee who works for only a part of the full year. This commonly occurs when an employee starts or leaves a company mid-pay period, mid-month, or mid-year. It ensures that employees are only compensated for the actual time they have worked.
The concept of proration is crucial for fairness, ensuring that neither the employer nor the employee is disadvantaged by the timing of employment. Whether you're a new hire, a departing employee, or an HR professional calculating final paychecks, understanding how to calculate prorated salary is essential.
How is Prorated Salary Calculated?
The core principle is to determine the employee's daily rate of pay and then multiply it by the number of days they actually worked within the specific pay period or employment term.
Key Components:
Annual Salary: The total gross salary an employee would earn if they worked a full year.
Start Date: The first day of the employment period for which proration is being calculated.
End Date: The last day of the employment period for which proration is being calculated.
Pay Period: The duration for which the salary is being prorated (e.g., a week, a month, or the entire period of employment).
The Calculation Formula:
The most common method involves calculating a daily rate and then applying it.
Calculate the Number of Days Worked:
Determine the total number of days between the 'Start Date' and the 'End Date' (inclusive). Most systems consider a year to have 365 days, but some might use 360 or factor in leap years. For simplicity, we'll use 365 days in this calculator.
Days Worked = (End Date – Start Date) + 1
Calculate the Daily Rate:
Divide the Annual Salary by the total number of days in a year (typically 365).
Daily Rate = Annual Salary / 365
Calculate the Prorated Salary:
Multiply the Daily Rate by the number of Days Worked.
Prorated Salary = Daily Rate × Days Worked
Example Scenario:
Let's say an employee has an Annual Salary of $60,000. They start on March 15, 2024, and their employment ends on December 31, 2024.
Days Worked:
From March 15 to December 31, 2024, there are 292 days. (March has 31 days, so 31-15+1 = 17 days in March. April=30, May=31, June=30, July=31, Aug=31, Sep=30, Oct=31, Nov=30, Dec=31. Total = 17+30+31+30+31+31+30+31+30+31 = 292 days).
Daily Rate:
$60,000 / 365 days = $164.38 per day (approx.)
Prorated Salary:
$164.38/day × 292 days = $47,999.96 (approx.)
This calculator simplifies the process by using the start and end dates provided and the annual salary, calculating the prorated amount based on the number of days within that period. It also considers common pay frequencies to help estimate how this prorated amount would translate into actual paychecks.
function calculateProratedSalary() {
var annualSalary = parseFloat(document.getElementById("annualSalary").value);
var startDateStr = document.getElementById("startDate").value;
var endDateStr = document.getElementById("endDate").value;
var payFrequency = document.getElementById("payFrequency").value;
var resultDiv = document.getElementById("result");
if (isNaN(annualSalary) || annualSalary <= 0) {
resultDiv.innerHTML = "Please enter a valid annual salary.";
return;
}
if (!startDateStr) {
resultDiv.innerHTML = "Please select a start date.";
return;
}
if (!endDateStr) {
resultDiv.innerHTML = "Please select an end date.";
return;
}
var startDate = new Date(startDateStr);
var endDate = new Date(endDateStr);
if (endDate < startDate) {
resultDiv.innerHTML = "End date cannot be before start date.";
return;
}
// Calculate days between start and end dates (inclusive)
var timeDiff = endDate.getTime() – startDate.getTime();
var daysWorked = Math.floor(timeDiff / (1000 * 60 * 60 * 24)) + 1;
// Assume a year has 365 days for simplicity, ignoring leap years for this calculation
var daysInYear = 365;
var dailyRate = annualSalary / daysInYear;
var proratedSalary = dailyRate * daysWorked;
var resultHTML = "Your prorated salary for the period is: $" + proratedSalary.toFixed(2) + "";
// Additional information based on pay frequency
var infoText = "";
switch (payFrequency) {
case 'weekly':
var weeklyRate = annualSalary / 52;
infoText = " This period has " + daysWorked + " days. Based on your selected pay frequency (Weekly), your estimated earnings for this period would be approximately $" + (weeklyRate / 7 * daysWorked).toFixed(2) + ".";
break;
case 'bi-weekly':
var biWeeklyRate = annualSalary / 26;
infoText = " This period has " + daysWorked + " days. Based on your selected pay frequency (Bi-Weekly), your estimated earnings for this period would be approximately $" + (biWeeklyRate / 14 * daysWorked).toFixed(2) + ".";
break;
case 'semi-monthly':
var semiMonthlyRate = annualSalary / 24;
infoText = " This period has " + daysWorked + " days. Based on your selected pay frequency (Semi-Monthly), your estimated earnings for this period would be approximately $" + (semiMonthlyRate / (365/24) * daysWorked).toFixed(2) + "."; // Approximation for days in a semi-monthly period
break;
case 'monthly':
var monthlyRate = annualSalary / 12;
infoText = " This period has " + daysWorked + " days. Based on your selected pay frequency (Monthly), your estimated earnings for this period would be approximately $" + (monthlyRate / (daysWorkedInMonth(endDate.getMonth(), endDate.getFullYear())) * daysWorked).toFixed(2) + "."; // This is a simplified approach for monthly estimation
break;
}
resultDiv.innerHTML = resultHTML + "" + infoText + "";
}
// Helper function to get days in a month (simplified for monthly estimation)
function daysWorkedInMonth(month, year) {
return new Date(year, month + 1, 0).getDate();
}