Disclaimer: The content of this article pertains to the altHR payroll module (not PayrollPanda). As of this date, the altHR payroll module has been discontinued as we form a new partnership with PayrollPanda to bring forth enhanced payroll solutions for our users.


There are 3 common pro-ration formulas when coming to pro-rate employee's salary according to Employment Act 1955/ JTK:


  1. Incomplete Month
  2. Unpaid Leave
  3. Leave Pay (Leave Encashment)


Every company and HR personnel have to be alerted to the formula to avoid any unnecessary audit or penalty by the authorities.  


Note: Should you need any advice on any customized formula that is followed by the company, please contact JTK.



Incomplete Month


We have published a detailed article on this, please refer to Incomplete Month Salary Pro-Ration Calculation



Unpaid Leave


The formula as advised is:


(Salary/Days in the month)*Count of Unpaid Leave taken


For eg,


Employee A's salary is RM2500

He has taken 3 days of unpaid leave in January 2023


The value of Unpaid leave to be deducted from his salary is,

(2500/31)*2 = RM161.29


Note: If the employee has a fixed allowance, the amount of the fixed allowance should be considered as part of the salary to be calculated in the formula



Leave Pay


Also known as Leave Encashment. Leave Pay is the compensation of the unused leave of the employee, usually, it pays when the employee resigns from the company and has unused leave; or if a company leave policy is practiced to encash the unused leave by end of the year for all of the employees.


The formula as advised is:


(Salary/26)* Count of Unused Leave


For eg,


Employee B's salary is RM3600

She has 5 days of unused leave upon her last day of work with the company


The value of the Leave Pay to be added to her salary is,

(3600/26)*5=RM692.31