This article explains the available methods for salary proration in Preliminary payroll. For more information on the behavior of proration methods, read our article on frequently asked questions in Preliminary payroll.
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Note:
The salary proration methods described in this article are not available for DATEV users.
Salary proration methods in Preliminary payroll
Prorate salary calculation is essential for ensuring employees are paid accurately whenever changes occur during a payroll period. This can happen in the case of:
- Entry or exit of the company after the first day of the payroll period
- Compensation changes (Example: raise/decrease of compensation)
- Compensation type changes (hourly to fixed and vice versa)
- Leave starting/ending mid-payroll period (Example: parental leave)
Personio supports a wide range of proration methods, allowing you to tailor payroll calculations to your company’s needs. You can configure the proration methods at the legal entity level, supporting both international expansion and local payroll requirements.
Note:
When calculating payroll, it’s important to distinguish between full calendar month periods and mid-month payroll periods:
- Full calendar month: If the payroll period runs from the first to the last day of the month, the entire calendar month is used for payroll calculations. These payroll periods are also referred to as simply “months.”
- Mid-month to mid-month: If the payroll period starts and ends mid-month (Example: from the 15th of one month to the 14th of the next), only the days within this specific period are included in payroll calculations. In this case, the whole calendar month is not used; instead, the exact days of the selected payroll period serve as the basis for prorated calculations.
Proration methods overview
The following table gives you an overview of available proration methods and formulas. For more detailed information on each method, read the respective sections below.
Notes:
- All proration methods discount public holidays. Example: A national holiday is not deducted from days counted as days worked if it falls on a working day.
- Different countries have different rules about how to calculate prorated payments. Always check the specific regulations for your business to make sure you're using the correct method.
| Proration Method | Description | Formula | Benefits |
| Actual working days | This method is based on each employee’s actual working days, defined by their working schedule. Varies by employee and month. | Prorated salary = monthly salary × (employee’s working days in period ÷ total working days in period) | More accurate for employees with non-standard working schedules |
| Fixed monthly – working days |
This method prorates based on the ratio of the employee’s working days in the period vs. the average number of working days in a month (configurable to 21, 21.67, 21.75, and 22 days), considering the employee's weekly working days. The prorated salary is capped at 100% of the monthly salary per pay slice, so if pay changes mid-month, each slice is capped separately—even if the total for the month exceeds the higher salary. Example: 21 average working days for a 5-day work week |
Prorated salary = Salary × (days worked in period ÷ (monthly average working days × (weekly working days ÷ FTE days))) | Accounts for part-time schedules |
| Fixed annual – working days | This method is based on company-defined yearly working days. It uses a default of 260 yearly working days for a 5-day Monday to Friday week. Calculation floors at zero if the calculated amount is negative. |
Prorated salary = monthly salary - (daily rate × Monday to Friday not worked in period)
Daily rate = (monthly salary × 12) ÷ yearly working days |
Accounts for part-time schedules |
| Calendar days – annual |
This method is based on the ratio of calendar days in the period vs. calendar days in the year. Calendar days: 365/366 (for leap years) |
Prorated salary = (monthly salary × 12) × (calendar days in period ÷ calendar days in year) | Treats all days equally, regardless of working schedule. |
| Fixed monthly – 30 days | This method uses a fixed amount of 30 days for every month, regardless of the actual calendar days or work schedules. | Prorated salary = salary × (days in period ÷ 30) |
Always uses 30 as denominator, regardless of actual month length. Simple calculation that doesn't account for working days. |
| Calendar days – monthly |
This method is based on the actual number of calendar days in the month. Example: 31 for January, 28/29 for February, 30 for April |
Prorated salary = salary × (days in period ÷ days in month) |
Uses the actual number of days in the month. No capping is applied, so the salary in case of mid-month salary changes can be higher than the new salary. |
Proration methods in detail
Actual working days
The actual working days method is based on the working schedule of the employee. The monthly salary is divided by the actual working days of the month.
Formula: Prorated salary = monthly salary × (employee’s working days in period ÷ total working days in period)
Examples
Mid-month leaver/starter
The following example illustrates the method with actual working days to prorate salary calculation based on an employee leaving mid-month. The same logic would apply for an employee starting mid-month.
Formula: Prorated salary = monthly salary × (employee’s working days in period ÷ total working days in period)
The employee has the following specifications:
- Monthly salary: €3000
- Leave date: March 15, 2024
- Working days in period: 11 (March 1-15, 2024)
- Total working days in the period: 23
Calculation:
- €3000 × (11 ÷ 23) = €1,434.78
Mid-month salary change
The following example illustrates the method with actual working days to prorate salary calculation based on a salary increase on the 20th of the month.
Formula: Prorated salary = Old monthly salary × (employee’s working days in period ÷ total working days in period) + New monthly salary × (employee’s working days in period ÷ total working days in period)
The employee has the following specifications:
- Old monthly salary: €3000
- New monthly salary: €3600 (effective April 20, 2024)
- 5-day working week (Monday to Friday)
- Working days with old monthly salary: 14 (April 1-19, 2024)
- Working days with new monthly salary: 8 (April 20-30, 2024)
- Total working days in the period: 22
Calculation:
- Old salary portion: (€3000/22) × 14 = €1909.09
- New salary portion: (€3600/22) × 8 = €1309.09
- Total for April: €1909.09 + €1309.09 = €3218.18
Fixed monthly – working days
This method calculates salary proration using a standardized number of working days per month, typically 21 for a standard five-day work week. It scales this number according to each employee's individual weekly work schedule. The resulting calculated average is then applied consistently to all months for that employee.
Formula: Prorated salary = Salary × (days worked in period ÷ (monthly average working days × (weekly working days ÷ FTE days)))
Examples
Mid-month leaver/starter
The following example illustrates the method with a fixed number of working days to prorate salary calculation based on an employee leaving mid-month. The same logic would apply for an employee starting mid-month.
Formula:
Prorated salary = Salary × (days worked in period ÷ (monthly average working days × (weekly working days ÷ FTE days)))
The employee has the following specifications:
- Monthly salary: €3200
- Leave date: October 12, 2024
- Personalized average working days per month: 21
- Working days in period: 9 (October 1–12, 2024, excluding weekends)
Calculation:
- €3200 × (9 ÷ (21 × (5 ÷ 5))) = €1,371.42
Mid-month salary change
The following example illustrates the method with a fixed number of working days to prorate salary calculation based on a salary increase on May 17th 2024.
Formula:
Prorated salary = Old salary × (days worked in period ÷ (monthly average working days × (weekly working days ÷ FTE days))) + New salary × (days worked in period ÷ (monthly average working days × (weekly working days ÷ FTE days)))
The employee has the following specifications:
- Old monthly salary: €2800
- New monthly salary: €3500 (effective May 17, 2024)
- Personalized average working days per month: 21
- Working days with old salary: 11 (May 1–16, 2024)
- Working days with new salary: 10 (May 17–31, 2024)
Calculation:
- Old salary portion: €2800 × (11 ÷ (21 × (5 ÷ 5))) = €1,466.67
- New salary portion: €3500 × (10 ÷ (21 × (5 ÷ 5))) = €1,666.67
- Both salary portions are checked to ensure they don’t exceed the 100% cap of the salary per slice.
- Prorated salary = €3,133.34
Fixed annual – working days
This method calculates salary proration based on company-defined working days, rather than individual employee working days. It utilizes preset yearly working day configurations (260 days for a five-day work week and adjusted numbers for work schedules with less or more working days per week). A daily rate is determined by dividing the yearly salary by the total yearly working days.
Formula: Prorated salary = monthly salary - (daily rate × Monday to Friday not worked in period)
Daily rate = (monthly salary × 12) ÷ yearly working days
Examples
Mid-month leaver/starter (Fixed Annual – Working Days)
The following example illustrates the method using a company-defined yearly working days configuration to prorate salary based on an employee leaving mid-month. The same logic applies for an employee starting mid-month.
Formula:
Prorated salary = monthly salary - (daily rate × Monday to Friday not worked in period)
The employee has the following specifications:
- Yearly salary: €36,000
- Monthly rate: €3,000
- Leave date: March 15, 2024
- Company-defined yearly working days: 260 (5-day work week)
- Non-applicable working days in March 2024: 8 (March 16–31, 2024, excluding weekends)
Calculation:
- Daily rate: €36,000/260 = €138.46
- Prorated salary: €3,000 – (€138.46 × 8) = €1,892.31
Mid-month salary change (Fixed Annual – Working Days)
The following example illustrates the method using a company-defined yearly working days configuration to prorate salary based on a salary increase mid-month.
Formula:
Prorated salary = old monthly salary - (daily rate × Monday to Friday not worked in period) + new monthly salary - (daily rate × Monday to Friday not worked in period)
The employee has the following specifications:
- Old yearly salary: €36,000
- Old monthly rate: €3,000
- New yearly salary: €42,000 (effective July 16, 2024)
- New monthly rate: €3,500
- Company-defined yearly working days: 260
- Old non-applicable working days: 12 (July 16–31, 2024, for old salary period, excluding weekends)
- New non-applicable working days: 11 (July 1–15, 2024, for new salary period, excluding weekends)
Calculation:
- Old daily rate: €36,000/260 = €138.46
- Old salary portion: €3,000 – (€138.46 × 12) = €1,338.48
- New daily rate: €42,000/260 = €161.54
- New salary portion: €3,500 – (€161.54 × 11) = €1,723.06
- Total for July 2024: €1,338.48 + €1,723.06 = €3,061.54
Calendar days – annual
This method calculates a daily rate based on the number of calendar days in the year (365 or 366 in a leap year).
Formula: Prorated salary = (monthly salary × 12) × (calendar days in period ÷ calendar days in year)
Examples
Mid-month leaver/starter (Calendar Days – Annual)
The following example illustrates the method using the total number of calendar days in the year to prorate salary based on an employee leaving mid-month. The same logic applies for an employee starting mid-month.
Formula:
Prorated salary = (monthly salary × 12) × (calendar days in period ÷ calendar days in year)
The employee has the following specifications:
- Monthly salary: €3000
- Leave date: June 15, 2024
- Days in period: 14
- Calendar days in 2024: 366 (leap year)
Calculation:
- Prorated salary = (€3000 × 12) × (14 ÷ 366) = €1,377
Mid-month salary change (Calendar Days – Annual)
The following example illustrates the method using the total number of calendar days in the year to prorate salary based on a salary increase mid-month.
Formula:
Prorated salary = (old monthly salary × 12) × (calendar days in period ÷ calendar days in year)
+ (new monthly salary × 12) × (calendar days in period ÷ calendar days in year)
The employee has the following specifications:
- Old monthly salary €3,000
- New monthly salary: €3,500 (effective September 16, 2024)
- Calendar days in 2024: 366 (leap year)
Calculation:
- Prorated salary = (€3,000 × 259 ÷ 366) + (€3,500 × 107 ÷ 366) = €3,146.45
Fixed monthly – 30 days
This method is based on 30 days for each month, independent of the actual days of the month or the employee’s working schedule. The monthly salary is always divided by 30 days.
Formula: Prorated salary = salary × (days in period ÷ 30)
Examples
Mid-month leaver/starter
The following example illustrates the method using a fixed 30 days for each month to prorate salary calculation based on an employee leaving mid-month. The same logic would apply for an employee starting mid-month.
Formula: Prorated salary = (salary/30 days) × applicable calendar days
The employee has the following specifications:
- Monthly salary: €3,000
- Leave date: August 18, 2024
- Applicable calendar days in period: 18 (August 1–18, 2024)
Calculation:
- Prorated salary = (€3,000/30) × 18 = €1,800
Mid-month salary change
The following example illustrates the method using a fixed 30 days for each month to prorate salary calculation based on a salary increase on the 20th of the month.
Formula: Prorated salary = (old salary/30 days) × applicable calendar days + (new salary/30 days) × applicable calendar days
The employee has the following specifications:
- Old monthly salary: €2,800
- New monthly salary: €3,400 (effective November 20, 2024)
- Applicable calendar days with old monthly salary: 19 (November 1–19, 2024)
- Applicable calendar days with new monthly salary: 11 (November 20–30, 2024)
Calculation:
- Old salary portion: (€2,800/30) × 19 = €93.33 × 19 = €1,773.27
- New salary portion: (€3,400/30) × 11 = €113.33 × 11 = €1,246.63
- Total for November 2024: €1,773.27 + €1,246.63 = €3,019.90
Calendar days – monthly
This method for salary proration calculates the daily rate by dividing the monthly salary by the actual number of calendar days in that specific month, irrespective of the employee's working schedule.
Formula: Prorated salary = salary × (days in period ÷ days in month)
Examples
Mid-month leaver/starter
The following example illustrates the method using the actual number of calendar days in the month to prorate salary calculation based on an employee leaving mid-month. The same logic would apply for an employee starting mid-month.
Formula: Prorated salary = salary × (days in period ÷ days in month)
- Monthly salary: €3,100
- Leave date: September 14, 2024
- Applicable calendar days in period: 14 (September 1–14, 2024)
- Full month calendar days: 30 (September 2024)
Calculation:
- Prorated salary = €3,100 × (14 ÷ 30) = €1,446.67
Mid-month salary change
The following example illustrates the method using the actual number of calendar days in the month to prorate salary calculation based on a salary increase in the middle of the month.
Formula: Prorated salary = old salary × (days in period ÷ days in month) + new salary × (days in period ÷ days in month)
The employee has the following specifications:
- Old monthly salary: €2,900
- New monthly salary: €3,500 (effective June 17, 2024)
- Applicable calendar days with old monthly salary: 16 (June 1–16, 2024)
- Applicable calendar days with new monthly salary: 14 (June 17–30, 2024)
- Full month calendar days: 30 (June 2024)
Calculation:
- Prorated salary = €2,900 × (16 ÷ 30) + €3,500 × (14 ÷ 30) = €3,180.00