Pro rata

Pro rata is an adverb or adjective, meaning "in proportion". [ [http://encyclopedia.farlex.com/pro+rata Farlex's The Free Dictionary] ] The term is used in many legal and economic contexts, and sometimes spelled "pro-rata".

Meanings of Pro rata

More specifically, "Pro rata" means:
# In proportion to some factor that can be exactly calculated. [ [http://www.answers.com/topic/pro-rata?cat=biz-fin Answers.com] . Accessed May 29, 2008.] [ [http://www.investorwords.com/5735/pro_rata.html Investor Words web site] ] [Ehrich, Eugene, "Amo, Amas, Amat and More", p. 233 (New York, Harper Row 1985). ISBN 0-06-27217-1.]
# To count based on amount of time that has passed out of the total time.
# Proportional Ratio [http://www.investopedia.com/terms/p/pro-rata.asp Investopedia web site] . Accessed May 29, 2008.]

Pro-rata has a latin etymology, from "pro", according to, for, or by, and "rata", feminine ablative of calculated (rate or change). [ [http://www.thefreedictionary.com/pro+rata The Free Dictionary] . Accessed May 29, 2008.]

Examples

Examples in law and economics include the following noted below.

Torts

When liability for a toxic tort or Products liability concerns many manufacturers, the liability under tort law is allocated proportionally. [ [http://www.maine.gov/dep/rwm/ewaste/pdf/proratashares2007.pdf] State of Maine government web site pdf file listing of Pro Rata Share Responsibility.]

Partnership liability

Each of several partners "is liable for his own share or proportion only, they are said to be bound "pro rata". An example ... may be found in the liability of partners; each is liable ... only "pro rata" in relation to between themselves." [ [http://www.clickdocs.co.uk/glossary/pro-rata.htm ClickDocs UK Legal web site] (quote marks changed to italics for clarity).]

Bankruptcy law

When a debtor files for bankruptcy, and "the debtor is insolvent, creditors generally agree to accept a pro rata share of what is owed to them. If the debtor has any remaining funds, the money is divided proportionately among the creditors, according to the amount of the individual debts." [ [http://law.jrank.org/pages/9440/Pro-Rata.html Jrank.org legal web site] ] "A creditor of an insolvent estate is to be paid pro rata with creditors of the same class." [ [http://www.wwlia.org/Pro-Rata.htm WWLIA legal web site] ]

Worker's pay and benefits

A worker's part-time work, overtime pay, and vacation time are typically calculated on pro rata basis. [John Steven Niznik, "Pro Rata", at [http://jobsearchtech.about.com/od/careereducation/g/pro_rata.htm Job Search Tech web site] .] [ [http://www.thesite.org/homelawandmoney/askthesiteqandas/moneyqandas/proratapayment TheSite.org web page about pro-rata payment for part-time work] ] [ [http://uk.answers.yahoo.com/question/index?qid=20070702040921AAK1Ie7 Uk Answers.com blog] ]

Under US Federal regulations, a government worker has the right, that, "When an employee's service is interrupted by a non-leave earning period, leave is earned on a pro rata basis for each fractional pay period that occurs within the continuity of employment." [ [http://ohrm.os.doc.gov/Leave/DEV01_000063 US Department of Commerce Office of Human Resources Management official web site] , citing 5 CFR 630.204.]

The American Federation of Teachers (AFT), a US labor union, argues that "all" part-time or adjunct instructors should get pro-rata pay for teaching college courses. [ [http://face.aft.org/index.cfm?action=article&articleID=0c3962ee-cc6a-40d4-bb1a-fe4666b5146c AFT web site] ] This is an important issue, as of 2007, for part-time faculty. [ [http://www.cpfa.org/chrisprorata.html California Part-time Faculty Association official web site page regarding pro-rata pay] ]

Irish secondary school teachers are entitled to pro-rata pay for part-time work. [ [http://www.asti.ie/faq/prorata.htm Association of Secondary Teachers Ireland official web site page regarding pro-rata pay] ]

Under British employment law, "Regulations state that, where appropriate, the pro rata principle should be applied to any comparison ... to be given ... holiday." [ [http://www.nasuwt.org.uk/Templates/internal.asp?NodeID=68399&ParentNodeID=70003 NASUWT web site] "Holiday" is used here in the British sense of the American vacation.]

Likewise, in Tasmania, Australia, the law clearly grants workers the privilege of part-time benefits for leave of absence. [ [http://www.wst.tas.gov.au/resource/wstfaqlsl.htm Tasmanian Government official web site] ] [ [http://www.wst.tas.gov.au/attach/longservicel.pdf] Tasmanian Government official web site pdf file.] This is granted under the "Long Service Leave Act 1976". [ [http://www.thelaw.tas.gov.au/tocview/index.w3p;cond=;doc_id=95%2B%2B1976%2BAT%40EN%2B20070816000000;histon=;prompt=;rec=-1;term= Tasmanian Legislation online official web site] ]

Investment laws

In corporate securities practice, "a pro-rata dividend means that every shareholder gets an equal proportion for each share he or she owns."

In banking, "Pro-rating also refers to the practice of applying interest rates to different time frames. If the interest rate was 12% per annum, you could pro-rate this number to be 1% a month (12%/12 months)."

Insurance

In insurance, "pro rata" is used to determine risk based on the time the insurance policy is in effect. [ [http://www.insurance.za.org/pro-rata-premium.htm InsuranceZA web site] ] It may also be used to describe "proportional liability" when more than one person is responsible for a loss or accident. [ [http://law.jrank.org/pages/9440/Pro-Rata.html Jrank.org legal web site] ]

College tuition

When a college student withdraws, colleges almost always refund tuition payments on a pro-rata basis. [See, "e.g.", [http://www.piedmontcc.edu/Admissions/proratarefundpolicy.asp] ]

References

ee also

* Employee Retirement Income Security Act
* Liability
* Vesting