Sprout Payroll supports two methods on pro-rating the basic salary of new hires.
To further understand this, let’s assume the following:
Employee: John Dela Cruz
Date Hired: September 22, 2017
Basic Salary (per month): 30,000.00
Work Days per Year: 261 (Rest Days are Saturdays and Sundays)
Statutory Period Schedule: Regular (1-15 and 16-30)
Current period to be processed: September 2017 Period 2 (September 16-30)
Here are the steps on how to compute the pro-rated basic salary using the Default method:
1. Compute the number of days per cutoff based on the work days per year. (Work Days per Year / Months in a Year / Periods per Month).
- 261 / 12 / 2 = 10.875
2. Count the number of days present (including the date hired).
- On this example, days present is 6 days.
3. Use this formula to compute the pro-rated basic salary:
(Basic Salary / 2) * (Days Present / Days per Cutoff)
- (30,000 / 2) * (6 / 10.875) = 8,275.86
On the other hand, here are the steps on how to compute the pro-rated basic salary using the Salary less Absent method:
1. Count the number of days not yet hired.
- On this example, days not yet hired is 4 days.
2. Compute for the daily rate. (Basic Monthly Salary * Months in a Year / Work Days per Year)
- 30,000 * (12 / 261) = 1,379.31
3. Use this formula to compute the pro-rated basic salary:
(Basic Salary / 2) - (Days not yet hired * Daily Rate)
- (30,000 / 2) - (4 * 1,379.31) = 9,482.76
Hence, for this example, the computed pro-rated basic salary results to the following
1. Using Default method: 8,275.86
2. Using Salary less Absent method: 9,482.76
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