What does pro rata mean?
Pro rata means in proportion: a pro rata salary, holiday or fee is the full amount scaled down to the share of time actually worked or used.
What pro rata means
Pro rata is Latin for "in proportion". In business it is used whenever a full amount is shared out according to time or quantity. The most common use is in job adverts: "£40,000 pro rata" means £40,000 is the full-time equivalent salary, and you will be paid a proportion of it based on your hours.
The same idea applies to holiday entitlement for part-time staff, to subscriptions that start mid-month, to rent apportioned on a property sale, and to dividends paid in proportion to shareholdings.
Example
A bookkeeping role is advertised at £36,000 pro rata, full time being 37.5 hours a week. You will work 22.5 hours.
- Your share of full time is 22.5 ÷ 37.5 = 0.6
- Your annual salary is £36,000 × 0.6 = £21,600
- Your monthly gross pay is £21,600 ÷ 12 = £1,800
Holiday works the same way. The statutory minimum for a five-day week is 28 days including bank holidays. At three days a week you would get 28 × 3 ÷ 5 = 16.8 days.
Why it matters for your business
Employers must treat part-time staff no less favourably than comparable full-time staff, so pay, holiday and most benefits need to be pro rated correctly. Getting it wrong is a common source of disputes.
Pro rating also matters in the accounts. Insurance, software and rent paid in advance need splitting across accounting periods: an annual insurance premium of £1,200 paid in October for a company with a December year end belongs £300 to this year and £900 to next year, held as a prepayment.
Pro rata and tax
Income tax is not pro rated by your hours. Everyone gets the same £12,570 personal allowance, spread across the year by PAYE, so a part-time salary of £21,600 has tax only on £9,030. That is why you cannot simply scale a full-time take-home figure.
Starting or leaving part-way through a year
Pro rating also applies to people who join or leave mid-year. An employee on £30,000 who starts on 1 October earns half of it, £15,000, by the end of March. Their holiday for the first leave year is pro rated in the same way, and on leaving they are paid for any accrued holiday not taken. Payroll software handles the daily rate, but contracts should say how part days are calculated.
Common questions
Divide your contracted hours by the full-time hours for the role, then multiply the full-time salary by that fraction. For 30 hours against a 40-hour week on £50,000, that is 30 ÷ 40 × £50,000 = £37,500 a year.
Before tax. A pro rata salary is a gross figure. Your take-home pay depends on income tax and National Insurance on the actual amount you earn, which you can check with a take-home pay calculator.