Monthly Basic Rate of Pay
1. The basic rate of pay includes wage adjustments and increments that an employee is entitled to under his/her contract of service, but excludes:
- Additional payments, e.g., Overtime, Bonus, Annual Wage Supplements;
- Any sum paid to the employee for reimbursement of special expenses incurred by him/her in the course of employment;
- Productivity incentive payments; and
- Any allowance however described
2. Basic rate of pay is used to calculate:
- Pay for work on a Rest Day or Public Holiday
- Overtime Pay
3. For a monthly-rated employee, the basic rate of pay for one day is calculated as follows:
Salary payable for incomplete month of work = Monthly gross rate of pay/ Total number of working days in that month* X Actual days worked
* Excludes rest days and non-working days but includes public holidays
Example:
Sharon joined Company ABC Ltd on 8 August 2011.
Her monthly basic salary is $2,000, and her fixed monthly transport allowance is $300. She is working on a 5-day week.
What is her monthly wage for August 2011?
Solution:
Monthly Gross Rate of Pay:
Basic Salary ($2,000) + Fixed Monthly Allowance ($300) = $2,300
Working days in August*: 23 working days
Actual Working Days : 18 days
August 2011 Monthly Wage:
($2,300/23 days) x 18 days = $1,800
* Excludes rest days and non-working days but includes public holidays
Monthly Gross Rate of Pay
1. Refers to the total amount of money including allowances payable to an employee for working for one month, but excludes:
- Additional payments, e.g. Overtime, Bonus, Annual Wage Supplements;
- Any sum paid to the employee for reimbursement of special expenses incurred by him/her in the course of employment;
- Productivity incentive payments; and
- Travelling, food or housing allowances
2. The “Gross Rate of Pay” is used to calculate payment of:
- Salary in lieu of notice of termination;
- Deduction of pay for absence from work;
- Paid holidays; and
- Paid leave
Incomplete Monthly Wages
For the purpose of calculating salary, a ‘month’ or ‘complete month’ refers to any month in the calendar year.
When to prorate?
- Starts work after the first day of the month
- Leaves employment before the last day of the month
- Takes no-pay leave of one day or more during the month
How to prorate?
Salary payable to a monthly-rated employee for an incomplete month of work is calculated using the formula below:
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