What does pro rata mean? In very simplistic terms, pro rata is an adverb or adjective meaning “in proportion”, and it is a term that is commonly used in connection in jobs, the law, and all kinds of economic contexts. But no matter which area pro rata is used in, it is always used in a proportional sense. As well as proportionality, pro rata is also calculated based on time, so an amount pro rata will be calculated on a proportional basis over a set period of time.
What does pro rata mean in salary? Anyone who works part time, or who is entitled to holiday pay or overtime, will probably come across the term pro rata. The salary for part time jobs are often advertised as being X amount pro rata. This means that whatever the salary is, the amount is calculated on a proportional basis. So if the salary for a full time position was £20k per year and the part time job was half the number of full time hours, the resultant salary would be described as £10k pro rata.
Employment laws vary in different parts of the world, but in most cases pay entitlement across all sectors is calculated in a pro rata basis for part time hours. This is also true for overtime pay and holiday leave. So if you depart your job mid way through the year, your holiday entitlement will be calculated on a pro rata basis and your remaining holiday pay will be added to your final salary.
What does pro rata mean in insurance?
Pro rata is used when calculating risk in insurance policies. It can also be used to decide proportional liability when trying to figure out who is responsible in an accident. For example, in a collision where one vehicle hits another, both of the drivers might be to blame, even if one was more at fault than the other. You will also come across pro rata calculations if you decide to change an insurance policy part way through the year. In order to calculate how much refund is owed, the insurer will look at how much you have already paid and divide it over the months remaining of the policy.
What does pro rata mean in bankruptcy?
When a person files for bankruptcy, they inevitably owe a large amount of money. Since it is unlikely that they owe all this money to only one person, there will be a long line of creditors queuing up to claim what is rightfully theirs. If the debtor has any funds left to pay some of their debts, the money is normally divided up amongst the creditors on a pro rata basis. Those who are owed more will receive a larger share of the available money.
There are several other areas that the term pro rata is used. In law it is often used in relation to tort and liability, and in partnerships, liability between several partners is calculated on a pro rata basis. It can also be used when refunding monies paid for various things.