Pro-rata is inherited from a Latin word, a combination of pro-and rata- proportion. In general, it is used to calculate or assign a specific value to something which indicates an equal proportion of the whole.
It is used in the fields of legal and economics. It is defined and calculated differently in different contexts, but the basic definition, i.e., proportion, will be the same.
In the UK, it is mainly associated with the employees’ salary. If an employer hires you on a pro-rata basis, then your salary will depend on the hours of work you have done.
For example, if an employee’s salary is £40,000 for 50 hours per week as per a pro-rata basis, but the employee works only 30 hours for that week, then the salary will be calculated for 30 hours only pro-rata basis.
What does Pro-Rata mean and How it is Associated with Salary?
In a company, there are mainly two types of employees categorized based on their salary
- Full-Time Employee
- Part-Time Employee
We all know how the full-timer is paid in a company; in this case, the employee gets paid a definite amount for an annum. But very few people have an idea of how the part-timers get paid. Most companies prefer the pro-rata process, which means they will get a salary based on the number of hours.
In general, we can say that the pro-rata employees get a salary moreover wages proportional to their work hours.
Calculation of Salary based on Pro-rata Process
The primary method for calculating pro-rata salary is dividing the yearly salary by the full-time work hours and then times it with the number of hours you work, i.e., actual work hours.
Pro-rata salary= Annual salary/ Full-time hours x Actual work hours
For example,
If an employee has a £40000 annual salary for 50 full-time hours, but the part-timer has worked only 35 hours, then his salary will be
Pro-rata salary (Part-timer) = 40000(Annual salary of full-timer)/50(total no. of hours full-timer) x 35(no. of hours part-timer worked)
Pro-rata salary=£800 x 35 = £28000
So, it’s better to consider it as a wage than a salary as it depends on the number of hours you work. The only disadvantage of this process is that it is not 100% accurate.
What impact does it have on my employment rights?
Some pro-rata incomes are pretty straightforward, if you work three full days, you will only receive three-fifths of your full-time salary. On the other hand, when working fewer days, you need to calculate operating profit your income based on the full-time hours per week you put in.
You should also make certain that each new position has clearly defined working hours and a set start date. Sometimes pro-rata positions are posted vaguely, and you may later discover that you are not required to begin working until several months after being hired!
You may need to plan for a few weeks of unemployment or consider taking out a short-term loan in these situations. People wishing to apply for a loan have a plethora of options.
Still, many illegitimate and unauthorized lenders are out there looking to take advantage of unsuspecting borrowers. If you are looking for a payday loan or same-day loan or any other short-term loan, please visit and apply with an FCA-registered lender or broker.
Pro-rata Leave/Holiday calculation
As per the rules of the UK government, all the employees, whether part-timers or full-timers, must get equal treatment concerning leaves, promotions, or any other facilities.
According to the UK government, all the employees are designated 28 days or 5.6 weeks legally. The company must follow this when assigning the holidays to their employees.
To calculate pro-rata holidays, the 5.6 multipliers are being used for part-timers.
For example,
If a full-time employee is working 5 days a week, then his number of holidays will be calculated as:
5(no. of days full-timer worked) x 5.6 =28 days
Whereas, if a part-timer works only 3 days a week, then his number of holidays will be calculated as:
3(no. of days part-timer worked) x 5.6 = 16.8 days
The part-timers are entitled to get 16.8 holidays as per pro-rata.
Effects of pro-rata salary on employee perks
There are certain perks or benefits that the pro-data employees miss while working on a pro-rata basis.
The full-time employees get the benefits of leaves on a weekly and yearly basis which is not the same in the case of a pro-rata employee, and if a full-timer gets 4 weeks of leaves, then the part-timer will get 2 weeks of leave as they’re not full-time employees of the company.
Sometimes the part-timer may get more leaves, but it will solely depend on the company’s rules and regulations.
The full-timers are subject to getting health insurance as per the company’s policy, but the part-timers may or may not be included in this based on the company’s rules.
Pros and Cons of employing Pro-rata part-timers
There are many benefits of hiring part-timers on a pro-rata basis. It mainly saves budget for the overall company’s expenditure, as you are paying only for the number of hours they work and not for the hours that are not profitable.
One more advantage of hiring part-timers is that you get to hire the employees based on a specific skill required for a project, and they get paid according to their skill and the hours they work.
It is beneficial to hire part-timers for start-ups and working from home and part-timers as it will minimize their expenditure compared to hiring full-timers.
The main disadvantage of hiring the part-timers is whether they will be fully dedicated to their work which indirectly affects the company’s turnover and whether they’ll cope in a team with part-timers.
Conclusion
Most of us have heard the word “pro-rata” before, usually while applying for a new job. It’s possible that the income will be prorated, which means it’s an extremely significant part of the employment. However, if you are uncertain of pro-rata compensation, the amount offered may be deceiving. So, what does the statement mean in its most literal sense?
