Accurate payroll management is crucial for HR department. Understanding what a prorated salary means is key to managing these situations effectively. This guide will provide a comprehensive breakdown of everything you need to know about it.
What is Salary Proration?
Salary proration is the process of adjusting an employee's salary to reflect the actual number of days worked within a given payroll period. This calculation is often required when an employee starts or leaves mid-month, or when there’s a salary change during the month.
In Singapore, understanding how to calculate prorated salary accurately is essential for ensuring compliant and efficient payroll management. This guide will walk you through the formula, common scenarios, and how to automate proration in your payroll system.
Common Scenarios Requiring Salary Proration:
- An employee begins work after the first day of the month.
- An employee resigns before the last day of the month.
- An employee receives a salary raise in the middle of the month.
Salary Proration Formula in Singapore
To calculate prorated salary in Singapore, the formula typically used is:
Monthly gross rate of pay : Total amount of money, including allowances, payable for one month's work. This excludes:
- Additional payments (overtime, bonus, AWS).
- Reimbursement of special expenses incurred during the course of employment.
- Productivity incentive payments.
- Travel, food and housing allowances.
Total Number of Working Days in the Month : Excludes rest days and non-working days, but includes public holidays.
Total Number of Days the Employee Actually Worked in that Month : Includes public holidays, paid hospitalisation leave and annual leave, if entitled.
For more info on the calculation for incomplete month of work, you can refer here
How is Salary Proration Automatically Calculated?
To streamline payroll processing and ensure salary proration is handled automatically, it’s important to configure the following settings accurately:
A ) Office Working Days are Set Correctly
Login to the BrioHR account
1. Click on HR Lounge
2. Navigate to Settings
3. Click on Offices
4. Click the pencil icon (Edit)
5. In the Customize Working Days section, toggle the button ON to set your custom working days.
- By default, the working days is set as Monday to Friday. If your office working days is only on Monday to Friday, you can ignore this setting.
- Example : If your office working days are Monday to Saturday, check the box next to the name of the day.
7. Once done with the update, click the Submit button to save the change.
B) Number of Working Days per Week is Set Correctly
1. Click on HR Lounge.
2. Navigate to Payroll.
You'll be directed to the Payroll dashboard page.
3. Click on Settings.
4. Click on General.
5. Scroll down to the Calendar section.
6. Enter the number of working days per week.
7. Click the Save once you've completed the update.
NOTE:
When these settings are correctly configured, the payroll system will automatically prorate salaries based on employees’ start dates, resignation dates, or mid-month salary adjustments.
Why Accurate Salary Proration Matters in Singapore
- Compliance: Ensures compliance with the Ministry of Manpower’s (MOM) regulations on salary calculations.
- Fairness: Guarantees employees are compensated fairly for the actual number of days worked.
- Payroll Efficiency: Automates complex salary calculations, reducing the risk of errors and saving HR time.
Need Assistance?
If you have any questions or require assistance, please reach out to our support team via live chat or email us at support@briohr.com.