Calculating AWS

Can you please advise is there a standard formula of calculating pro-rated Annual Wage Supplements (AWS)?

There isn't any mandatory method or formula used to calculate the AWS, it is all depends on the company practices and policies.

The following are the common practice to recognize months of service and calculate the AWS:-

(1) Go by Calendar Days
Based on the joined date of the new employee, calculate physically the number of calendar days he is in service with the company, and then divided by the number of calendar days (365 or 366) of that year.

For example, if the employee joined on 1 June, his AWS will be
30 (June) + 31 (July) + 31 (August) + 30 (Sept) + 31 (Oct) +30 (Nov) +31 (Dec) / 365 x monthly salary
= 214 / 365 x monthly salary

(2) Go by Month of Service
It is simple, to use the number of months of service / 12 x monthly salary

However, the tricky part is that you need to specific the definition of the completed month and make it transparent in your policy.

One common example, only if employee joined on or before 15th, that particular month will be treated as completed month. If employee joined on 14-June-2008, he will be entitled to 7 months of completed month (June included), but if he joined the company on 16 June, he will be only entitled to 6 months (June excluded)

Remember whatever the policy it is, whether AWS only applicable for confirmed employee, or the method you take to calculate the AWS, it is always a good practice to clearly state in your company AWS Policy and also to included in your new employee orientation slides.

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