Lump Sum Merit Increase Calculator

Formula

The formula to calculate the Lump Sum Merit Increase (LSMI) is:

\[ LSMI = \left( \frac{HR \times PI}{100} \right) \times W \times 40 \]

Where:

LSMI – The lump sum merit increase in dollars ($).
HR – The hourly pay rate in dollars per hour ($/hr).
PI – The lump sum merit percentage increase (%).
W – The number of weeks of pay (weeks).

Definition

Lump Sum Merit Increase (LSMI): The total amount of merit increase given as a lump sum, calculated based on hourly pay rate, percentage increase, and number of weeks of pay.
Hourly Pay Rate (HR): The amount of money paid per hour of work.
Percentage Increase (PI): The percentage increase in pay given as a merit increase.
Number of Weeks of Pay (W): The number of weeks for which the merit increase is calculated.

Example

Let's say the hourly pay rate (HR) is $20 per hour, the lump sum merit percentage increase (PI) is 5%, and the number of weeks of pay (W) is 52 weeks. Using the formula:

\[ LSMI = \left( \frac{20 \times 5}{100} \right) \times 52 \times 40 = 2080 \text{ dollars} \]

So, the lump sum merit increase is $2080.

What is a Lump Sum Merit Increase?

A Lump Sum Merit Increase is a one-time payment given to employees as a reward for their performance. It is calculated based on the employee's hourly pay rate, the percentage increase awarded, and the number of weeks of pay. This increase is typically given instead of a permanent raise and is used to recognize and reward exceptional performance.