LOP or Loss of Pay is defined as the deduction in salary of an employee when the employee takes leave without having an adequate leave balance. In such circumstances, an employee is permitted to take a leave, but the salary gets deducted. The Loss of pay is calculated based on the per day salary of the employee. If an employer allows an employee to compensate for the leave by working on a holiday or a weekend and the employee does not show up, the employee suffers loss of pay.
While calculating LOP the length of employment contract is considered. Whether the employee is on an annual contract, or a monthly pay cycle is considered while making the per day salary calculations.
Most companies do not offer LOP for employees during the probation period.
Long-term employees are allowed LOP against other benefits like sick leave, bonus, overtime, etc.
If an employee is gravely sick or injured and has run out of casual and earned leave for the month, they can take LOP leave to attend to the situation.
When employees take time off without prior notice, loss of pay is applied to salary. Long-term unauthorized absence can lead to serious problems at work and is not encouraged.
An employee can take LOP for various reasons like family emergencies, health issues, divorce or legal matters, bank issues. In such cases, the employee can extend a notice prior to taking the leave.
Here is how you can calculate LOP. Multiple the number of days an employee has taken the leave into the effective salary of one day.
LOP = Effective salary of one day* Number of days employee has taken the leave
The Effective one-day salary of an employee= Total monthly salary of an employee/ Number of days in a month
If you are out of leaves for the month, and still must take leave for an urgent reason you can communicate with your team and manager about leave. Ask them what you can do to compensate for the leave.
To avoid LOP on your salary, you can always work overtime or work on weekends or holidays. But you need to communicate this with your employer.
Track your leaves and ensure you don’t take any extra leaves every month. Even if you take a leave, make sure you can compensate for it to your employer to prevent LOP.
Loss of pay in salary happens when an employee who does not have any leave balance takes a leave of absence. In that case, the employee informs the employer about the leave and suffers the loss of pay.
There is no difference between LOP and LWP. LOP stands for loss of pay and LWP stands for leave without pay.
Loss of pay is also called LOP in short form.
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