Sleet
Attendance & Leave

Loss of Pay (LOP)

The direct payroll deduction made from an employee's monthly pay for days marked as unapproved absence or approved unpaid leave.

Quick answer

The direct payroll deduction made from an employee's monthly pay for days marked as unapproved absence or approved unpaid leave.

Attendance & LeaveGoverned by Indian law
Category
Attendance & Leave
Legal status
Governed by Indian law
Relevant to
HR, managers & employees
Reading time
3 min
Overview

What is Loss of Pay (LOP)?

Loss of Pay (LOP) is the payroll calculation mechanism where an employee's pay is reduced proportionally for days not worked. Calculated on a per-day wage formula (Monthly Gross Salary ÷ Number of Calendar/Working Days), LOP triggers for both approved LWP and unexcused AWOL/absconding days.

At a glance

Key takeaways

  • 1Loss of Pay (LOP) is the payroll calculation mechanism where an employee's pay is reduced proportionally for days not worked.
  • 2Calculated on a per-day wage formula (Monthly Gross Salary ÷ Number of Calendar/Working Days), LOP triggers for both approved LWP and unexcused AWOL/absconding days.
Business impact

Why Loss of Pay (LOP) matters

Directly impacts monthly payroll disbursement accuracy and maintains parity between hours worked and wages paid.

Step by step

How Loss of Pay (LOP) works in practice

  1. 1

    Set the policy

    Define how Loss of Pay (LOP) works: eligibility, accrual or limits, approval flow and carry-forward rules.

  2. 2

    Capture data

    Record Loss of Pay (LOP) through biometric, mobile or web check-ins and leave requests rather than paper registers.

  3. 3

    Approve & regularise

    Managers review exceptions, missed punches and requests related to Loss of Pay (LOP) within a fixed window.

  4. 4

    Feed payroll

    Lock the cycle so Loss of Pay (LOP) flows into salary, loss-of-pay and encashment calculations.

Scenario

Real-world example

eg

An employee earning ₹60,000/month in a 30-day month has 2 days of unapproved absence. The HRMS auto-applies an LOP deduction of ₹4,000 (2 × ₹2,000).

Law & rules

Indian statutory reference

Payment of Wages Act, 1936 Section 7(2)(b) permits wage deductions for absence from duty.

Rates, limits and state rules change often. Confirm against the latest notification or with your compliance advisor.

Get it right

Best practices and common mistakes

Best practices

  • Publish a clear policy for Loss of Pay (LOP) and keep it in the employee handbook.
  • Use one source of truth for attendance, leave and shift data.
  • Set approval timelines so requests do not pile up before payroll.
  • Audit overtime and loss-of-pay entries each cycle.
  • Align policies with the applicable Shops & Establishments rules.

Common mistakes

  • Applying Loss of Pay (LOP) differently across teams, which causes disputes.
  • Letting attendance corrections happen after payroll is processed.
  • Not tracking leave balances in real time.
  • Ignoring state-wise holiday and weekly-off rules.
Put it to work

Managing Loss of Pay (LOP) in SleetHR

Attendance & leave

SleetHR manages Loss of Pay (LOP) with configurable policies, self-service requests and approvals, and sends the final numbers to payroll automatically.

Book a demoExplore solutions
Attendance & LeaveLeave Without Pay (LWP)An authorized period of absence granted to an employee after exhausting all paid leave balances, resulting in proportional salary deductions.Attendance & LeaveAbsent Without Leave (AWOL)A status assigned to an employee who is absent from their designated workplace or shifts without sanctioned leave or prior managerial authorization.Payroll & CompensationGross SalaryThe total monthly salary payable to an employee including basic pay and allowances, prior to statutory and voluntary deductions.
Questions

Frequently asked questions about Loss of Pay (LOP)

The direct payroll deduction made from an employee's monthly pay for days marked as unapproved absence or approved unpaid leave.