When it occurs
A salaried employee joining mid-month
A salaried employee leaving mid-month
Salary updates
An employee taking unpaid leave
Calculating PILON for leavers (pay for unused holiday)
How it works
If the salary applies for less than 50% of the pay period
Day rate = Annual salary / Working days in the year
Pay = Day rate x Days worked in pay period
If the salary applies for more than 50% of the pay period
Day rate = Annual salary / Working days in the year
Pay = Monthly salary – (Day rate x Days not worked in pay period)
Frequently asked questions
Why have a seperate method depending on how much of a pay period the salary applies for?
Different months have different amounts of working days (for example, January has more more than Febuary).
The average amount of working days in a month is approximately 21.7 days per month. However, a month may have as much as 23 working days.
If the employee works 22 of 23 working days in a long month, and we multiply their day rate by 22, we'll end up with a higher salary than their initial monthly salary. So they'd end up being paid more for taking a day off.
As a result, it's more accurate to subtract from the monthly amount when the employee has worked more than 50% of the working days in the pay period.