Prorate an Employee's Wages

This guide explains how to prorate employee wages during payroll runs in BambooHR, applicable for new hires, terminations, unpaid time off, and pay changes. The proration tool functions only within standard payrolls. It automates wage calculations for salaried and hourly employees under specific conditions, such as consecutive pay rate changes without gaps. If conditions are unmet, manual wage entry is necessary. Employees needing wage adjustments will be flagged in the payroll run. The guide includes sections on using the wage proration tool, adjusting employee salaries, and managing multiple wage changes. Users can access detailed instructions on the payment details page and the wage adjustments modal for further clarity on calculations and adjustments.

  • Jun 29, 2026
  • Knowledge

Title
Prorate an Employee's Wages
Article Text
Prorating employees wages is part of Payroll that is an add-on feature.

Can I prorate wages mid-pay period due to hiring, termination, unpaid time off, or a pay change?

Purpose: This guide will show you how to prorate an employee's wages right within your payroll run. BambooHR will calculate wage prorations for new hires, terminations, and unpaid time off. It will also teach you about wage proration when changes are made mid-pay period.

Please be aware that the proration tool only works within standard payrolls.

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Table of Contents

When to Use the Wage Proration Tool

There are a few reasons you might need to prorate an employee's wages.

  1. An employee is hired
  2. An employee is terminated
  3. The employee had a mid-pay period pay change
  4. The employee took unpaid time off

In these cases, the you will see a banner on the Edit page of your payroll run, prompting you to validate or complete their wage proration.

Please be aware that this tool does not account for Holidays in an employee's work schedule.

Prorating an Employee's Wages

Prorating a salaried employee's wages

If an employee is hired or terminated within the pay period, you will see a New Hire or Terminated flag by their name. Similarly, if an employee takes unpaid time off during the pay period, you will see an Unpaid Time Off flag by their name. In each of these circumstances, you will also see a banner at the top of the page letting you know that their wages need to be prorated.

The system indicates, "Some employees need pay adjustments." You are prompted to "Review the calculations to ensure their wages are accurate."

You can also access the Wage Adjustment modal for the individual employee in the following places:

  1. On the Edit page, when hovering on the employee row and clicking the “Adjust Wages” icon next to the amount of wages.
  2. On the employee's Payment Details page in the Wages section.

After clicking Review Adjustment, you can click the edit icon next to an employee or select Review Individually to adjust wages if necessary.

If an employee fits the criteria, the system will suggest a prorated wage for you. Clicking the edit icon or Review Individually will open the Edit Proration modal. From here, you can also choose to calculate the wages yourself by entering hours and wages (both required), or you can choose not to prorate and pay the employee as if they worked the entire pay period.

Choosing to prorate wages, whether you use the suggested amount or calculate wages yourself, will also adjust the employee's regular hours.

Once the wages are to your satisfaction for each employee, click Review to return to the previous page. Finally, click Submit Wages and determine if you'd like to leave a note, then you will return to your payroll run.

When do I need to calculate the proration myself?

The Wage Adjustment tool will only calculate a proration for new hires, terminated employees, mid-pay period pay changes, and unpaid time off under the following conditions:

Salaried Employees

  1. The employee works a 40-hour work week.
  2. The employee works 8 hours per working day.
  3. Unpaid time off is taken in full-day increments of 8 hours.

If any of these conditions are not met, you will see a warning banner that explains you will need to enter their wages manually.

What does leaving a salary proration note look like?

After you adjust salaries accordingly and click Submit Adjustments, you will see the paystub note modal. The wage proration note is standard and non-editable.

Paystub notes on the Edit page

You can quickly review or edit an employee's paystub notes on the Edit page by hovering over the note icon on the employee's picture.

Clicking Edit Notes opens a modal where you can adjust an individual note, delete the adjusted wages note (this action is not reversible), or review the global note. Once you're satisfied with your changes, don't forget to click Save Notes.

Paystub notes on the Payment Details page

To see the paystub note on the Payment Details page, open your payroll and from the Edit page, and click on the employee's name. The standard wage adjustment note is under the Paystub Notes section at the bottom. You can always delete the adjusted wages note from this page, but you won't be able to restore the message. If that happens and you want to let them know why their salary was adjusted, you can always leave an additional individual note.

Mid-Pay Period Pay Changes for Salary Employees

BambooHR automates the process of calculating Salary employees' wages when there is a mid-pay period pay change. It will try to calculate the prorated wage under the following conditions:

  • Employee's Pay Type is Salary at the start of the Pay Period.
  • Employee's hour per week is set to 40.
  • Employee's Salary Pay Rate changes during the pay period.
  • Pay Rate change happens in consecutive dates with no gaps in between.
  • Employee's Salary Pay Rate change was an Update or New Entry and not a Correction to an existing entry.

If all criteria are met, but there were also other compensation field changes that could impact pay for the pay period, the system cannot calculate. These situations include:

  • If the new Start Date is outside of the Pay Period
  • If Pay Schedule is changed
  • If Pay Type is changed
  • If Hours Per Week is changed
  • If Pay Per is changed
  • Overtime Status is changed (e.g., Exempt or Non-Exempt).

The wage calculation is pay schedule frequency agnostic and assumes a Monday-Friday 40-hour work week, similar to Salary Proration. The calculation involves the "Previous Salary for x days + New Salary for x days". The formula used is: ([Starting Annual Salary] / [Annual Hours Worked]) * [Hours Per Day Worked] * [Pay Period Days Worked at that Salary] + ([New Annual Salary] / [Annual Hours Worked]) * [Hours Per Day Worked] * [Pay Period Days Worked at the New Salary]. For this calculation, Annual Hours Worked is always assumed to be 2080 hours per year (40 * 52), and Hours Per Day Worked is 8. Pay Period Days Worked refers to the number of working days (Monday - Friday). If the pay change does not meet the proration criteria, the system cannot calculate.

Payment Details Page

If a Salary employee needs adjusted wages, the Prorate Wages banner will appear during your payroll run. A Pay Change flag also shows below the employee's name, similar to New Hire or Terminated.

Wage Adjustments modal

1. If there are multiple events affecting an employee's wages for the pay period, the system will still attempt to prorate their wages and you will see "Multiple Factors" under their prorated wage.

2. The Salary Adjustments modal shows a breakout of salary wages for both pay rates (e.g., "Jun 1-6: $1000", "Jun 7-15: $1,569.23").

3. If an employee's wage is updated mid-pay period, but does not meet all of the criteria above, they will still show in the Salary Adjustments table, but their wages will list as $0.00 with the "Needs review" warning underneath.

4. If any employee's prorated wages could not be automatically calculated, you musts review them individually before submitting the wages.

When reviewing individually, you will see the suggested wage and how the system calculated it. You can also choose to pay them their original rate, the new rate, or calculate it yourself.

If the employee's wages changed during the pay period but the system could not calculate their pay, you will see the "Heads Up!" warning message when reviewing individually. In this case, you can choose to forgo proration or to prorate the wages yourself.

Proration with multiple factors affecting the wages

For employees with more than one salary change event during the pay period, the system reminds you in a few different places.

For payroll review and paystubs, the hours worked are combined, and only the total wages are shown.

If there is more than one applicable proration event during the pay period for an employee (e.g., New Hire + Pay Change, Terminated + Pay Change, New Hire + Terminated + Pay Change), you will see multiple flags. Before reviewing individually, you will see a prorated wage and "Multiple Factors."

When reviewing their wages, each of the changes affecting their wages are listed at the top. You'll also see how the system calculated the proration.

Why isn't the system suggesting a prorated amount?

If the employees do not work a typical 40-hour work week, our system will isolate the employees but ask you to calculate their prorated wages. For mid-pay period pay changes, this also applies if the salary employee does not work a typical schedule (Monday - Friday at 40 hours per week). In such cases, their wages will show as "$0.00 Needs review" as suggested wages cannot be calculated, and you must enter their wages manually.

After clicking the Review Adjustments button, a modal will open to show you which employees need attention, and you'll be able to enter their hours worked and appropriate wages. The system will display a "Heads up!" warning message indicating that suggested wages cannot be calculated, and you'll need to review their wages individually. For these employees, the Prorated Wages section will show $0.00 and Needs review.

Mid-Pay Period Pay Changes for Hourly Employees

BambooHR automates the process of calculating hourly employees' wages when there is a mid-pay period pay change. It will try to calculate the prorated wage under the following conditions:

  1. The employee's pay type is Hourly at the beginning of the pay period.
  2. The employees' hourly base pay rate and/or project pay rate changes during the pay period, and the effective date(s) of the change(s) are the same. If the dates differ, the system cannot calculate prorated wages.
  3. The wage change must occur on consecutive dates with no gaps between pay rates. If there's a break between the end date of one rate and the start date of the next, the system cannot calculate prorated wages.
    • System would calculate: 1/1/2024 – 9/8/2025 → 9/9/2025 – Present
    • System would not calculate: 1/1/2024 – 9/8/2025 → 9/11/2025 – Present
  4. The change was entered as an Update or New Entry and not a correction to an existing entry.
  5. All other fields in the Compensation table must stay the same.

We’ll calculate wages based on dates and hourly rates, and then add the difference in pay as an Extra Pay type

  1. For Regular wages, we’ll consolidate and use Additional Regular Pay
  2. For Overtime wages, we’ll consolidate and use Additional Overtime Compensation
Payment Details Page

If an Hourly employee needs adjusted wages, the Prorate Wages banner will appear during your payroll run. A Pay Change flag also shows below the employee's name, similar to New Hire or Terminated.

Wage Adjustments modal

1. If there are multiple events affecting an employee's wages for the pay period, the system will still attempt to prorate their wages, and you will see "Multiple Factors" under their prorated wage.

2. The Wage Adjustments modal shows a breakout of hourly wages for both pay rates (e.g., "Jun 1-6: $24.00/hr", "Jun 7-15: $26.00/hr").

3. The employee's hourly base pay and a project pay rate were updated during the pay period.

4. If an employee's wage is updated mid-pay period, but does not meet all of the criteria above, they will still show in the Wage Adjustments table, but their wages will list as $0.00 with the "Needs review" warning underneath.

5. The employee's base rate changed, and they worked overtime during the pay period.

6. The employee's hourly base pay stayed the same, but the project pay rate changed during the pay period.

When reviewing individually, you will see the suggested wage and how the system calculated it. You can also choose to exit the extra pay amount or to skip the extra pay completely.

If the employee's hourly pay rate changed during the pay period, but the system could not calculate their pay, you will see the warning message when reviewing individually. In this case, you can choose to enter the extra pay yourself or forgo the extra pay altogether.

Proration with multiple factors affecting the wages

For employees with more than one wage change event during the pay period, the system reminds you in a few different places.

For payroll review and paystubs, the hours worked are combined, and only the total wages are shown.

If there is more than one applicable proration event during the pay period for an employee (e.g., New Hire + Pay Change, Terminated + Pay Change, New Hire + Terminated + Pay Change), you will see multiple flags. Before reviewing individually, you will see a prorated wage and "Multiple Factors."

When reviewing their wages, each of the changes affecting their wages are listed at the top. You'll also see how the system calculated the proration.

Why isn't the system suggesting a prorated amount?

If an employee falls into any of the following scenarios during the pay period, the system cannot calculate a proration, and you will have to manually add their extra pay.

  • The wage change's new Start Date is outside of the pay period.
  • The pay schedule is changed.
  • The pay type is changed.
  • The overtime status is changed (e.g., Exempt or Non-Exempt).
  • There were multiple base compensation rate changes within the pay period and/or multiple project pay rate changes for the same project within the same pay period.

 

After clicking the Review Adjustments button, a modal will open to show you which employees need attention and you'll be able to enter their extra pay or forgo the extra pay entirely. The extra pay is the difference between their original rate and their new rate.

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