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Home : Essentials of Payroll : Paying Salaries for Partial Periods
Paying Salaries for Partial PeriodsPaying Salaries for Partial PeriodsMany salaried employees begin or stop work partway through a pay period, so the payroll staff must calculate what proportion of their salary has been earned. This calculation also must be done when a pay change has been made that is effective as of a date partway through the person's pay period. To determine the amount of a partial payment, calculate the salaried employee's hourly rate, then multiply this rate by the number of hours worked. A common approach for determining the hourly rate is to divide the total annual salary by 2,080 hours, which is the total number of work hours in a year. Example. The Pembrose Company pays its employees on the fifteenth and last day of each month, which amounts to 24 pay periods per year. One employee, Stephanie Ortiz, has been hired partway through a pay period at an annual salary of $38,500. She starts work on the twentieth of the month, and there are seven business days left in the pay period. The payroll staff first determines her hourly rate of pay, which is $38,500/2,080 hours, or $18.51. They then calculate the number of hours left in the pay period, which is 8 hours a day × 7 working days, or 56 hours. Consequently, Ms. Ortiz's pay for her first pay period will be $18.51 × 56 hours, or $1,036.56. 720
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