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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.

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