Proration is all about proportionally adjusting recommendations for employees based on either a) when they started or b) when they received their last compensation adjustment.
The proration date is the point from which to start measuring how much proration the employee qualifies for backwards. We prorate by the number of days from the employee’s start date or last compensation adjustment date to the proration date, divided by 365. This determines a proration factor, that is then multiplied by the recommendation amount to get the final recommendation.
You can choose between the employee’s start date or their last salary change date as the date to use to determine the proration factor. If you pick start date, the formula looks like this:
proration factor = ({proration date} - {start date} (in days)) / 365 bound by 0 and 1
The proration factor can never be less than 0 or greater than 1.
For example, as a company, if you wanted to start prorating employees who started after 1/1/22 - the proration date would be 1/1/23. If an employee then started on 7/1/22, they would see 6 months of proration ⇒ proration factor = 0.5. If an employee started on 3/1/22, they would see 9 months of proration ⇒ proration factor = 0.75.