How You Prorate Earnings and Deductions for the US
There are multiple proration conversion rules you can use to help you calculate standard or supplemental earnings.
You select a proration conversion rule when you define an earnings or deduction element using the Elements task. They calculate prorated earnings based on calendar days or work schedules.
This topic covers:
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How you prorate deductions
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How prorated earnings are calculated
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Examples of earnings calculation based on calendar days
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Example of earnings calculation based on work schedule
How You Prorate Deductions
Typically, you don't prorate deductions, such as deductions based on a percentage of earnings. However, you might consider prorating fixed-rate deductions, such as a voluntary deduction for a fitness center membership.
In most cases, you use the predefined global proration formula for deductions (GLB_DEDN_PRORATION).
This formula calculates the proration value by:
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Multiplying the periodic value by the number of calendar days in the proration period.
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Divides this figure by the number of calendar days in the payroll period.
How You Prorate Earnings
When you create a recurring earnings element, and you identify it as subject to proration, the element template automatically associates it with a predefined proration formula (US_EARN_PRORATION). This formula uses the proration calculation method you selected to prorate the earnings.
This formula doesn't prorate:
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Nonrecurring elements
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Earnings elements with a calculation rule of unit multiplied by rate, if rate and hours are entered in the element entry
These examples show how proration calculations are performed on earnings calculations based on:
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Calendar days
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Work schedules
Example of Prorating Earnings Based on Calendar Days
In this example, the formula calculates proration results based on various conversion rules and daily proration units.
With these settings |
The formula calculates this |
For example |
---|---|---|
Standard Rate Annualized rule Daily proration units |
Calendar days in proration period multiplied by annual pay and divided by annual calendar days |
(9 * 25000) / 365 + (22 / * 30000) / 365 = 616.44 + 1808.22 = $2424.66 |
Standard Rate Daily rule Daily proration units |
Total pay divided by calendar days in the payroll period and multiplied by calendar days in the proration period |
(500 / 7) * 3 = $214.29 |
Example of Prorating Earnings Based on a Work Schedule
In this example, the formula calculates proration results based on various conversion rules and workday-related proration units. If you don't define any working hours, the proration formula checks the assignment definition for the number of working hours and frequency. If it doesn't find any, it uses 40 as the number of working hours and 5 as the number of days for the work week.
With these settings |
The formula calculates this |
For example |
---|---|---|
Periodic Work Schedule Rate Annualized rule Workday proration units |
Work schedule days in proration period multiplied by annual pay and divided by 260 days, the default number of annual working days A day in a work schedule is a 24-hour period. |
(6 * 25000) / 260 + (16 * 30000) / 260 = 576.92 + 1846.15 = $2423.07 |
Periodic Work Schedule Rate Annualized rule Hourly proration units |
Work schedule hours in proration period multiplied by the annual pay and divided by 2080, the default number of annual working hours. |
(10 * 25000) / 2080 + (30 * 30000) / 2080 = 120.19 + 432.69 = $552.88 |