How to Calculate Prorated Salary — Step by Step

The formula, in one paragraph

Prorated salary has three steps. First, work out the full-period pay: divide the annual salary by the pay periods per year — 12 for monthly, 24 for semimonthly, 26 for biweekly, 52 for weekly. Second, work out the daily rate: divide the full-period pay by the working days in the period. Third, multiply the daily rate by the days you worked. That is the prorated pay. The rest of the period is the pay you miss: the full-period pay minus the prorated pay.

Step 1: Work out the full-period pay

Divide the annual salary by the pay periods per year. At the example salary of $72,000, paid monthly, the full-period pay is $72,000 divided by 12, which is $6,000.00. That is what a full month pays. On a biweekly schedule the same salary pays $72,000 divided by 26, which is $2,769.23 a period, and on a weekly schedule it pays $72,000 divided by 52, which is $1,384.62 a week.

Step 2: Work out the daily rate

Divide the full-period pay by the working days in the period. At the example the full-period pay is $6,000.00 and the month has 22 working days, so the daily rate is $6,000.00 divided by 22, which is $272.73. That is what one working day is worth. The daily rate depends on the pay frequency: a biweekly daily rate is $276.92, slightly higher than the monthly $272.73, because 26 times 10 is 260 working days a year against 12 times 22, which is 264.

Step 3: Multiply by the days worked

Multiply the daily rate by the days you worked in the period. At the example the daily rate is $272.73 and 11 days were worked, so the prorated pay is $272.73 times 11, which is $3,000.00. That is the partial paycheck. Eleven days is half the month, so half the pay is the answer — and the check confirms it.

Step 4: Work out what the missed days cost

Subtract the prorated pay from the full-period pay. At the example that is $6,000.00 minus $3,000.00, which is $3,000.00. The missed 11 days cost exactly as much as the worked 11 days paid, because the month is split in half. At $120,000 a year the same 11 days pay $5,000.00; at $48,000 a year, 15 days pay $2,727.27.

The biweekly variant

The same steps work on any schedule. On a biweekly schedule the full-period pay is $72,000 divided by 26, which is $2,769.23. The daily rate is $2,769.23 divided by 10, which is $276.92. Five days worked in the first two-week period pays $276.92 times 5, which is $1,384.62, and the missed five days cost the same $1,384.62. A worker who starts mid-month on a biweekly schedule gets $1,384.62 for that first period, not $3,000.00 — the period is shorter, so the check is smaller.

Working backwards from a target

The calculation also runs backwards. The salary that pays exactly $5,000 prorated at 15 of 22 days a month is $88,000, because $88,000 divided by 12 times 15 divided by 22 is $5,000.00. The salary that pays exactly $4,000 prorated biweekly at 5 of 10 days is $208,000. And the days that pay exactly $2,000 prorated at $72,000 a month are 7.3333 — no whole-day count gives exactly $2,000, so 7 days pays $1,909.09 and 8 days pays $2,181.82.

Working days or calendar days?

This guide uses the working-days method, the standard payroll method for salaried staff: the daily rate is the full-period pay divided by the working days in the period. Some employers use calendar days instead, dividing the monthly pay by the calendar days in the month — 30 or 31 — which gives a slightly different answer. At $72,000 a year the calendar-days daily rate is about $200.00, against $272.73 on working days, and a mid-month start then pays for the calendar days worked, weekends included. Ask your payroll department which one they use, because the same start date pays a different amount under each.

What NOT to do

Do not count weekends as working days: the 22 working days are the weekdays, and counting 30 days instead would cut the daily rate to about $200.00. Do not assume the daily rate is the same on every schedule: the biweekly daily rate is $276.92 and the monthly one is $272.73. Do not forget the missed days: at $100,000 a year, 20 days worked still leaves $757.58 unpaid, and that is money the month never pays.

That box is the whole formula.