LOP (Loss of Pay)

What is LOP (Loss of Pay)?

Loss of Pay (LOP) refers to the salary deduction made when an employee takes leave beyond their entitled paid leave balance or is absent without approval. It means the employee is not paid for those specific days of absence. LOP ensures that employees are compensated only for actual working days, maintaining fairness and adherence to company policies.

How is LOP Calculated?

LOP amount is calculated based on the employee’s daily wage and the number of leave days taken without pay. The formula is:
LOP = (Monthly Salary ÷ Number of Working Days) × Number of LOP Days

Example

For example, if Priya earns ₹60,000 per month and there are 20 working days, her daily wage is ₹3,000. If she takes 3 days of LOP, her salary will be reduced by ₹9,000, making her net salary ₹51,000 that month.

When Does LOP Occur?

• When employees exhaust all paid leave and continue to be absent.
• Absence without prior approval or against company policy.
• During probation or notice period as per company rules.
• Disciplinary actions or leave taken without valid cause.

Why is LOP Important?

LOP enforces discipline and fairness in leave management while protecting employers from wage liabilities during unauthorized or excess absenteeism. Employees should be aware of their leave entitlements and procedures to avoid such deductions.

Tip: Always check your payslip for LOP deductions and ensure prior approval for leaves to prevent unexpected salary reductions.