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Free Demo. Calculating Prorated Bonuses and 13th Month Bonuses. Utilize a prorated bonus program and calculate the right prorated payout for your workers. Written by Sarah Reynolds April 29, When to Make One-Time Prorated Bonus Payments Knowing how to calculate a prorated bonus and when to make prorated bonus payments can vary based on when an employee was hired or terminated.
Common reasons for prorating include: Employee new hire start date — employees start jobs throughout the year, which means that many employees start in the middle of a performance period.
In these cases, they may only be eligible for a partial bonus payout, based on their new hire start date. The most common use of "prorate" is "pay a fraction of the agreed amount, to match the fraction of the service that was delivered". I used to see it all the time when I did tech support for a phone company. Yes, it is the "proper" use of prorate. That is how the word prorate is used all the time. To me, this is not much more than a dictionary definition question. It might be instructive to realize that the word "prorate" is an english variant of "pro rata" which invokes the words "proportional" and "ratio, or rate.
A rate is a ratio For example, "we will prorate your yearly bonus, which is a percentage of your yearly salary, for the fractional year. Sign up to join this community. The best answers are voted up and rise to the top. Stack Overflow for Teams — Collaborate and share knowledge with a private group. Create a free Team What is Teams? Learn more. Ask Question. Asked 6 years, 9 months ago. Active 2 years, 11 months ago.
Viewed 34k times. Improve this question. It would depend if your bonus was calculated on your base pay rate or what you actually earned. I'm not sure this is a language problem so much as a communication issue. ColleenV There's no communication concerns - my manager and I agreed on the number amount, only disagreed on the definition of prorated.
I have updated my question to clarify precisely what I'm asking. Employers should exercise caution when deciding to pay a pro rata salary because this is not always appropriate.
Salaried personnel are classified as either exempt or non-exempt under the federal Fair Labor Standards Act. Paying a pro rata salary to an exempt employee may conflict with the provisions of the FLSA. However, a bonus may be prorated for any salaried employee. The term pro rata means to reduce one quantity in the same proportion as a reduction in another quantity.
For instance, if a person works halftime, her salary would be prorated to 50 percent of a full-time salary. Prorating salaries is sometimes desirable because a salary is a predetermined amount of compensation that is normally paid regardless of the number of hours actually worked. Employers may prorate salaries for several reasons. For example, an employee may work part time, take a personal day off or take several weeks unpaid leave under the Family Medical Leave Act.
An employee who is paid on a salary basis may be non-exempt or exempt. Non-exempt workers are protected by the minimum wage and overtime rules of the FLSA. For this reason, a non-exempt worker's salary must be converted into an hourly rate and his work hours recorded.
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