In a nutshell, a pro rata salary is an amount you pay a part-time salaried employee if they worked full-time.
There’s a simple equation you can follow so you can rest assured you’re paying your people the correct amount:
It’s important to note that this isn’t always 100% accurate, and it might be better to calculate pay entitlement by working out the number of hours worked, rather than the number of days your employee has worked.
In other words, it’s more helpful to think about it as a wage, rather than a salary.
Almost all workers are legally entitled to 5.6 weeks’ paid holiday a year (known as statutory leave entitlement or annual leave).
If you’ve got any part-time employees, they get exactly the same leave entitlement as full-timers on a pro rata basis.
Holiday entitlement begins from an employee’s first day of employment. However, you can restrict the individual taking this entitlement during their first year of employment to 1/12th of the full leave entitlement for each month of service.
This can be done to protect your business if an employee uses all their holiday leave and then leaves your business. This kind of information should be explained in the employee’s contract of employment.
Although annual leave can’t normally be carried over from one year to another, there are a few exceptions – if a long-term sickness prevents an employee from taking leave, maternity, adoption, or parental leave, for example. In these situations, the employee can carry any untaken leave over into the next leave year.
You can include bank holidays as part of statutory annual leave, but you don’t actually have to grant employees bank holidays or public holidays as paid leave. There’s no legal precedent that says these days must be paid.
As an employer, it’s entirely up to you whether you choose to offer bank holidays as paid leave. Whatever you do choose, your employees’ entitlement to paid leave should always be outlined in an employment contract.
It’s a common myth that if a person works on a bank holiday, they will get time-and-a-half or even double time. This is actually untrue.
There’s no statutory right to pay employees extra if they work bank or public holidays. Once again, if there are any occasions where an employee would be entitled to extra pay, it would have to be clearly outlined in a contract of employment.
When someone works for you on a part-time or shift basis, it’s important you make sure they’re not treated unfairly when it comes to their bank holiday entitlement.
In fact, the Part-time Workers (Prevention of Less Favourable Treatment) Regulations, introduced in 2000, stated that part-time staff are entitled to the same terms as full-time workers, but on a pro-rata basis.
The best way to work out annual leave entitlement for your part-time and shift working employees is to give them a pro-rated allowance. Even if someone doesn’t typically work on the days that bank holidays fall, it’s best practice to work it this way.
For more information about how to work out bank holiday pay for your employees, check out our article here.
A contract of employment is an agreement – written or verbal – between an employee and an employer. Your contracts don’t have to be in writing to meet your legal requirements. But it’s typically best practice to make sure they are, as it saves potential misunderstanding further down the line.
Your employee’s contract should include information about holidays, pay and benefits, job title, disciplinary measures, and notice periods. This still applies for employment on a pro rata basis and should be clearly outlined in your employee’ contract.
If you’d like a more in-depth guide to employment law discussing everything from recruitment to working time regulations, you can download our free guide here.
If the wheels are spinning just trying to wrap your head around pro rata wages – or you just need a helping hand in getting your HR in order – the Citation team is always here for you.
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