Understanding Prorated Annual Allowance Calculations in Bob
When eligibility for an annual allowance starts or ends partway through the year, Bob prorates the allowance based on the relevant policy setup. This article explains the logic behind these calculations.
How Bob Prorates Annual Allowances
Each full eligible month contributes the full monthly accrual, while partial months are calculated proportionally based on the proration method configured in the policy at that time.
For partial months, Bob uses one of these methods:
- Workdays proration: Based on the ratio of eligible workdays out of total workdays in that month.
- Calendar days proration: Based on the ratio of eligible calendar days out of total calendar days in that month.
General Calculation Formula
The general formula for calculating prorated allowances is as follows:
- Calculate the monthly accrual: Annual allowance ÷ 12
- Calculate each partial month based on the active proration method at that time:
- Workdays: monthly accrual × (eligible workdays ÷ total workdays)
- Calendar days: monthly accrual × (eligible calendar days ÷ total calendar days)
- Add the full monthly accrual for each full eligible month.
- Add all amounts together to get the total prorated allowance.
Examples
Example 1: Workdays Proration
Employee was assigned to the policy on 26/06/2025
- Annual allowance: 28 days
- Assignment period: 26/06/2025–31/12/2025
- Monthly accrual: 28 ÷ 12 = 2.333 days per month
June is a partial month, and the policy was configured to prorate using workdays. In June, there are 19 workdays, including 2 public holidays.
- Eligible workdays from 26/06/2025: 3 workdays
- June partial accrual: 2.333 × (3 ÷ 19) = 0.368 days
- Full months from July to December: 2.333 × 6 = 14 days
Total prorated allowance for 2025: 0.368 + 14 = 14.368 days
Example 2: Calendar Days Proration
Employee was terminated on 27/02/2026
- Annual allowance: 28 days
- Eligibility period: 01/01/2026–27/02/2026
- Monthly accrual: 28 ÷ 12 = 2.333 days per month
January is a full month: 2.333 days
For February:
- February ratio: 27 ÷ 28 = 0.964
- February partial accrual: 0.964 × 2.333 = 2.249 days
Total prorated allowance: 2.333 + 2.249 = 4.583 days
Important Points to Remember
- Full months always use the full monthly accrual.
- Partial months follow the proration method active at that time.
- Changes to the proration method can impact later calculations.
- The final value may be rounded in the UI.