What is Loss Of Pay {LOP}? | Meaning & Definition | Akrivia HCM

What is loss of pay?

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.

Loss Of Pay (LOP)

Factors for LOP

Length of employment contract:

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.

Tenure of employment contract:

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.

Causes of LOP

Illness or Injury:

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.

Unauthorized absence:

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.

Other reasons:

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.

LOP formula

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

How to avoid LOP?

Apply for leave in advance

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.

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.

Avoid unnecessary leaves

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 – FAQs

What is LOP in salary?

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.

What is the difference between LOP and LWP?

There is no difference between LOP and LWP. LOP stands for loss of pay and LWP stands for leave without pay.

What is loss of pay in short form?

Loss of pay is also called LOP in short form.

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