Overview:
This article explains how the system calculates Unpaid Time Off deductions from an employee’s salary.
The calculation is based on:
The employee’s monthly gross salary
Their working days or working hours in the affected month
Their effective work schedule
Any mid-month work schedule or salary changes
All calculations follow a per-day or per-half-day deduction method, depending on the leave taken.
TABLE OF CONTENTS
- Base Formula for Unpaid Time Off
- Mid-Month Work Schedule Change Scenarios
- Mid-Month Salary Change Scenarios
- Monthly Gross Salary Settings Guide in Payroll System
- [Singapore] MOM Compliance & Reference
- [Malaysia & Hong Kong] Company-level Proration Settings Override
Base Formula for Unpaid Time Off
- Daily Unpaid Leave Deduction Formula:
Monthly Gross Salary / Total Working Days in the Month - Half-Day Unpaid Leave Deduction Formula:
(Monthly Gross Salary / Total Working Days in the Month) / 2
Where:
Monthly Gross Salary = Sum of all recurring pay items that are tagged as Gross or have a Pro-ration = Yes
Total Working Days in the Month = The employee’s total working days for that month, calculated based on their effective work schedule
- Amount is always rounded to the nearest two decimal places
- Unpaid Leave Examples by Work Schedule
Here are the example simulation for 1 day unpaid leave for several work schedules
[A] Monday - Friday full days weekly
[B] Monday - Saturday full days weekly
[C] Monday - Thursday full days, Friday AM weekly
| Monthly gross rate of pay | Month / Year | [A] Working days | [A] Amount | [B] Working days | [B] Amount | [C] Working days | [C] Amount |
| $3,000 | Sept 2025 | 22 | $3,000 / 22 = $136.36 | 26 | $3,000 / 26 = $115.38 | 20 | $3,000 / 20 = $150.00 |
| $4,700 | Sept 2025 | 22 | $4,700 / 22 = $213.64 | 26 | $4,700 / 26 = $180.77 | 20 | $4,700 / 20 = $235.00 |
| $6,500 | Aug 2025 | 21 | $6,500 / 21 = $309.52 | 26 | $6,500 / 26 = $250.00 | 18.5 | $6,500 / 18.5 = $351.35 |
| $10,000 | Feb 2025 | 20 | $10,000 / 20 = $500.00 | 24 | $10,000 / 24 = $214.67 | 18 | $10,000 / 18 = $555.56 |
Mid-Month Work Schedule Change Scenarios
- If an employee's work schedule changes mid-month, the system automatically calculates total working days by summing working days across all effective schedules during that month.
Example 1: One work schedule in month
- Work schedule: 1-30 September 2025, Monday-Friday full days
- Working days in September = 22 days
- Monthly Gross Salary = $5,000
- Calculation: $5,000 ÷ 22 = $227.27 per day
Example 2: Two work schedules in month
- Work schedule 1: 1- 15 September 2025, Monday- Friday full days = 11 working days
- Work schedule 2: 16-30 September 2025, Monday-Wednesday full days = 7 working days
- Total working days in September 2025: 11 + 7 = 18 days
- Monthly Gross Salary = $5,000
- Calculation: $5,000 ÷ 18 = $277.78 per day
This employee's unpaid leave deduction is higher because they have fewer working days in the month due to the schedule change.
Example 3: Three work schedules in month
- Work schedule 1: 1-10 September 2025, Monday-Friday full days = 8 working days
- Work schedule 2: 11-18 September 2025, Monday-Wednesday full days = 3 working days
- Work schedule 3: 19-30 September 2025, Wednesday half-day only = 0.5 working days
- Total working days in September 2025: 8 + 3 + 0.5 = 11.5 days
- Monthly Gross Salary = $5,000
- Calculation: $5,000 ÷ 11.5 = $434.78 per day
This employee's per-day deduction is significantly higher because their work schedule was reduced dramatically mid-month, resulting in very few total working days.
Example 4: New Hire Mid Month Work Schedule
- Work schedule: 15-30 September 2025, Monday - Friday - full days
- Working days in September: 22 days (1-30 September 2025)
- Base salary record 1: 15-30 September 2025, $5,000 gross (Prorated in the Payroll System)
- Unpaid time off on 16 September 2025: $5,000 ÷ 22 = $227.27 per day
Mid-Month Salary Change Scenarios
- If an employee’s salary changes mid-month, the system determines the unpaid leave deduction based on the salary effective at the beginning of the month, not an averaged or blended monthly amount.
Example 1: No base salary changes in month
- Work schedule: 1-30 September 2025, Monday-Friday full days
- Working days in September: 22 days
- Base salary record: 1-30 September 2025, $5,000 gross
- Unpaid time off on 2 September 2025: $5,000 ÷ 22 = $227.27
- Salary for September: $5,000 - $227.27 = $4,772.73
Example 2: One base salary change in month
- Work schedule: 1-30 September 2025, Monday-Friday full days
- Working days in September = 22 days
- Base salary record 1: 1-14 September 2025, $5,000 gross = 10 working days
- Base salary record 2: 15-30 September 2025, $10,000 gross = 12 working days
- Unpaid time off on 2 September 2025: $5,000 ÷ 22 = $227.27 per day
- Unpaid time off on 16 September 2025: $5,000 ÷ 22 = $227.27 per day
Monthly Gross Salary Settings Guide in Payroll System
What Is Included in Monthly Gross Salary?
A pay item will count towards Monthly Gross Salary for unpaid leave calculation only if all conditions below are met:
- Pay item is Recurring
- Tagged as Gross
- Pro-ration = Yes
The table below illustrates examples of pay items that could contribute to gross salary based on their settings:
| Pay Item Name | Category | Item Type | Gross / Net | Pro-ration Settings | Count towards Monthly Gross |
| Allowance | Recurring | Allowance | Gross | Yes | ✅ |
| Incentives | Recurring | Incentive Allowance | Gross | Yes | ✅ |
| Allowance | Recurring | Allowance | Gross | No | ❎ |
| Housing Allowance | Recurring | Housing/Rental Allowance | Gross | No | ❎ |
| Shift Allowance | Ad-hoc | Allowance | Gross | No | ❎ |
| Reimbursements | Ad-hoc | Reimbursements | Net | No | ❎ |
[Singapore] MOM Compliance & Reference
According to Singapore MOM guidelines:
- Housing, Transport, and Meal allowances are not pro-rated for unpaid time off and are not considered part of Gross Salary
- In our payroll system, these pay items are created by default and has the Pro-ration setting as No, hence not counting towards Monthly Gross Salary
However, an admin can choose to change Pro-ration setting as Yes depending on your company policy. These pay items will then count towards Gross Salary.
Ministry of Manpower (Singapore) Reference Article for further reading:
Monthly and Daily Salary: Definitions and Calculations
[Malaysia & Hong Kong] Company-level Proration Settings Override
In Malaysia & Hong Kong, you may configure a company-level proration setting in the payroll system that determines how total working days are calculated.
When enabled, this setting overrides the employee's individual work schedule, ensuring a consistent calculation method across all employees.
Option 1: Working Days (Default)
- Calculates total working days based on each employee’s assigned work schedule
- Follows the same logic as above examples
- Proration varies depending on the employee’s actual working days
Option 2: 26 Working Days (Malaysia only)
- Overrides the employee’s work schedule
- Uses a fixed 26 working days as the denominator for all employees
- Ensures consistent daily rate regardless of schedule changes
Option 3: Calendar Days (Malaysia and Hong Kong only)
- Overrides the employee’s work schedule
- Uses the total number of calendar days in the month as the denominator
- Daily rate varies depending on the month length
Calendar Days Example:
- September 2025 (30 days), Monthly Salary = $5,000
$5,000 ÷ 30 = $166.67 per day - August 2025 (31 days), Monthly Salary = $5,000
$5,000 ÷ 31 = $161.29 per day - February 2025 (28 days), Monthly Salary = $5,000
$5,000 ÷ 28 = $178.57 per day
The work schedule is fully ignored and all employees use the same calendar-day basis.
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