How to Prorate Salary?

Depending on the company policy, there are 3 common methods:

1. Fixed number of days, ie. 26 days [must, for employees earning less than RM 2,000]

2. Calendar days, eg. 31 days for August

3. Working days in calendar month, eg. 22 days including public holidays, Mon - Fri

The most common method is where companies fix the number of days at 26 since there won't be any chances of dispute.

Example: Azim has a basic salary of RM 5,000 per month. He tendered his resignation and his last day of service is on the 16th of August.

Using method 1:

From 1 - 16 August, there are 14 working days excluding Sundays.

Daily rate: RM 5,000 / 26 = RM 192.31

Prorated salary: RM 192.31 x 14 = RM 2,692.34

Using method 2:

Daily rate: RM 5,000 / 31 = RM 161.29

Prorated salary: RM 161.29 x 16 = RM 2,580.65

Using method 3:

From 1 - 16 August, there are a total of 12 working days.

Total working days in August: 22

Daily rate: RM 5,000 / 22 = RM 227.27

Prorated salary: RM 227.27 x 12 = RM 2,727.27

Conclusion

Method 1: RM 2,692.34

Method 2: RM 2,580.65

Method 3: RM 2,727.27

Safest way of calculation is Method 1.