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Administrator Guide
Last Updated: 2023-06-23
Example: Time-Based Proration for Merit and Bonus Awards

Example: Time-Based Proration for Merit and Bonus Awards

A time proration rule includes
Time since Hire
,
Time since last Merit increase
, and
Leave of Absence
 proration criteria:
  • You hire Elena on January 1 at 90,000 USD annual.
  • You give her a pay increase of 10,000 USD annual on February 1 resulting in 100,000 USD annual.
  • She takes 1 month of personal leave in March.
  • The focal merit review begins on April 1.
  • Her nonprorated target merit increase is 5% annual.
Workday takes the most recent proration criteria, which is the compensation increase. The resulting eligible merit increase period is February 1 to April 1, or 2 months out of 12. The next proration criteria is the personal leave, which subtracts a month from the eligible period. Elena is eligible for 1 month of the merit increase (1/12) of the 100% merit increase target of 5,000 USD. Her target merit increase is 42% or 416.67 USD = the original merit increase target of 5% (or 5000) divided by 12.
The logic is slightly different if the leave of absence occurs before the compensation increase. If Elena:
  • Took her leave in February.
  • Received a pay increase that took effect on March 1.
Workday takes the most recent proration criteria, which is the compensation increase. The resulting eligible merit increase period is March 1 to April 1, or 1 month out of 12. The next proration criteria is the personal leave. However, because the leave occurred before the compensation increase, Elena still has 1 eligible month. She's eligible for 1/12 of the 100% merit increase target of 5,000 USD. Her target merit increase equals the original merit increase target of 5% (or 5,000 USD) divided by 12. The result is 0.42% (rounded) so her target merit increase for this period is 416.67 USD. The resulting increase is exactly the same but the logic is necessarily different.