Prorated salary is a payment method where an employee is paid based on the number of hours or days they work in a pay period, instead of their regular salary. This method is used for employees who do not work the standard number of days or hours in a pay cycle, typically due to unpaid leave. Prorated salaries are most commonly considered for part-time workers, who work less than 35 hours per week. Prorated salaries are also known as pro-rata salaries in some countries .
Let’s get know more about what is prorated salary and how it works in Singapore. We will also share some tips on how to manage prorated salary easily and stay compliant with Singapore regulation.
How to Calculate Prorated Salary in Singapore?
There are different ways to calculate prorated salary in Singapore, depending on the frequency and duration of the pay period. Here are some common methods:
Prorate by months
This method is used when an employee works for a fraction of a month. Such as when they join or leave the company in the middle of the month. To calculate prorated salary by months, you need to divide the monthly gross rate of pay by the total number of working days in that month. Multiply by the number of days the employee actually worked. For example, if an employee’s monthly gross rate of pay is $3,000, and they worked for 15 days out of 22 working days in March, their prorated salary for March would be:
(3000 : 22) x 15 = 2045.45
The employee would receive $2,045.45 as their prorated salary for March.
Prorate by weeks
This method is used when an employee works for a fraction of a week. Such as when they take unpaid leave or work overtime. To calculate prorated salary by weeks, you need to divide the weekly gross rate of pay by the total number of working hours in that week. Multiply by the number of hours the employee actually worked. For example, if an employee’s weekly gross rate of pay is $750, and they worked for 32 hours out of 40 working hours in a week, their prorated salary for that week would be:
(750 : 40) × 32=600
The employee would receive $600 as their prorated salary for that week.
Prorate by days
This method is used when an employee works for a fraction of a day. Such as when they start or end their shift at different times. To calculate prorated salary by days, you need to divide the daily gross rate of pay by the total number of working hours in that day, and then multiply by the number of hours the employee actually worked. For example, if an employee’s daily gross rate of pay is $150, and they worked for 6 hours out of 8 working hours in a day, their prorated salary for that day would be:
(150 : 8) × 6 =112.50
The employee would receive $112.50 as their prorated salary for that day.
Alternatively, you can use a calculator to enter your monthly pay, start and end dates of work, and work days per week to get your prorated salary. You can also use formulas or functions in spreadsheet software to automate your calculations.
What are the Legal Requirements for Prorated Salary in Singapore?
According to the Employment Act of Singapore, employers are required to pay employees their prorated salaries within seven days after the end of each salary period. Employers are also required to provide employees with itemized payslips that show the details of their prorated salaries. Such as basic salary, allowances, deductions, overtime pay, and net salary. Employers who fail to comply with these requirements may face penalties or legal actions from the Ministry of Manpower (MOM).
Prorated salaries are also subject to income tax and Central Provident Fund (CPF) contributions in Singapore . Employees who receive prorated salaries must declare their income accurately and file their tax returns on time with the Inland Revenue Authority of Singapore (IRAS). Employers who pay prorated salaries must deduct and contribute CPF for their employees based on their actual wages earned in each month.
How to Manage Prorated Salary Easily and Stay Compliant?
Prorated salary can be a complex and tedious process for both employers and employees. It involves various calculations, adjustments, and compliance issues that can be time-consuming and error-prone. That is why you need a reliable and efficient payroll software to help you manage it easily and stay compliant with Singapore regulation.
Payroll Software from HRMLabs is a cloud-based solution that automates and simplifies your payroll process. It allows you to:
- Calculate prorated salaries accurately and quickly based on different scenarios and methods
- Generate and send itemised payslips to your employees via email or mobile app
- Deduct and contribute CPF for your employees automatically and securely
- File and pay income tax for your employees electronically and hassle-free
- Integrate with other HR modules such as attendance, leave, expense, and performance management
- Access your payroll data from any device, anywhere, anytime
Payroll Software from HRMLabs is designed to meet the needs and standards of Singapore businesses. It is compliant with the Employment Act, CPF Act, Income Tax Act, and other relevant laws and regulations in Singapore. It is also updated regularly to reflect the latest changes and updates in the payroll landscape.
Payroll Software from HRMLabs is more than just a payroll software. It is a complete HR management system that helps you streamline your HR processes, improve your employee engagement, and grow your business.
