LOP (Loss of Pay)
LOP, or Loss of Pay, refers to the deduction from an employee's salary for days of absence that are not covered by any paid leave balance (earned leave, casual leave, or sick leave). It occurs when an employee takes leave beyond their accrued entitlement or is absent without approval.
LOP is calculated on a per-day basis, typically using the formula: (Monthly Gross Salary / Total Days in Month) × Number of LOP Days, and is deducted directly from the employee's gross pay for that month. Some companies use a fixed 30-day divisor regardless of the actual number of days in the month, which should be clearly stated in the leave policy.
Key points
- ✓ Applied when an employee has no paid leave balance to cover an absence
- ✓ Formula: (Gross Salary / Days in Month) × Number of LOP Days
- ✓ Reduces gross salary, which in turn affects PF, ESI, and tax computation for that month
- ✓ Company policy determines whether the divisor is calendar days or a fixed 30/26 days
- ✓ LOP days are typically excluded from bonus and gratuity-qualifying service calculations
Example
If an employee's gross monthly salary is ₹31,000 and they take 2 LOP days in a 31-day month, the deduction is (₹31,000 / 31) × 2 = ₹2,000, so the employee receives ₹29,000 gross pay for that month before further deductions.
Frequently asked questions
Does LOP affect PF contribution?
Can LOP be adjusted against future leave accrual?
Is LOP the same as unpaid leave?
Explore the platform
Payroll & compliance, on autopilot.
Free for unlimited employees — PF, ESI, PT & TDS handled every cycle.