How do you calculate a prorated bonus?

Question

Zippia Team · Accepted Answer

To calculate a prorated bonus, you divide the number of days, weeks, or months the employee worked by 365, 52, or 12, respectively, then multiply the answer by the total bonus amount you would've paid for a full year's work.

Often companies will prorate bonuses for employees who either haven't or won't work the entire year they're earning a bonus. This is a common practice for other benefits such as paid time off, as it isn't good money management for an organization to pay employees for time that they weren't even hired.

Suppose you give all of your employees a $1,500 bonus at the end of the year. They have all worked for you for over a year, except for one employee hired on November 1. To calculate her bonus, you'd take the number of days she worked for you (61) and divide it by the total number of days in a year (365). This gets you about 0.167.

Next, you'll multiply 0.167 by $1,500, which gives you $250.50. This is the prorated bonus that your newest employee earned.