How do I calculate pro rata salary for variable days per month?
We have taken on a new employee who will be working for us full time once she has moved to the area and finished all her old freelance work. Until then we have agreed to keep a record the days she works for us and pay her monthly on a pro rata basis.
When she joins us properly, she will get 30 days holiday a year and all 8 bank holidays.
Do I simply divide her annual salary by 260 (52 weeks x 5 days) to get a day rate, and pay that per day worked in each month? If so, presumably I will then have to calculate a pro-rata'd holiday pay, as she won't be taking any holiday?
Or do I take holidays and bank holidays out of the equation and calculate a day rate based on 222 days a year? Then presumably there would be no need to calculate pro rata'd holiday?
Or... do I take each month, work out the days she could have worked and calulate the pay for the month as a proportion of that... but then how to I calculate holiday pay?
Help!
Amber Dennis
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Salary Calculation
Amber,
The most correct way to process this would be to calculate her hourly wage. Annual salary devided by 2080. Then multiply that by the hours she actually works for you. This way you won't have to worry about holiday calculations or pro-rata issues. You also will eliminate possible wage & hour issues.
Hope this helps.
Pro rata pay
I believe all 260 days should be included or you will otherwise have a skewed daily rate.