Glossary
What is loss of pay?
What loss of pay means, which days count as unpaid, and how a payslip is pro-rated when an employee has unpaid days.
Updated
In short
Loss of pay is the reduction in salary for days an employee was not paid for, such as absences and leave without pay. SimpleERP counts unpaid days from attendance and leave and pro-rates the payslip automatically.
Loss of pay, or LOP, is the reduction in an employee's salary for working days they are not paid for: unauthorised absence, unpaid leave, or leave taken beyond the balance. It is usually applied by scaling each pro-rated earning by paid days over working days. Deductions worked out as a percentage of pay, such as a pension contribution, then follow the reduced amount.
Loss of pay (LOP): a worked example
Sam K at Harbour Steel Furniture, a fictional business paying in US dollars, takes 2 days of unpaid leave in a month with 20 working days, so he is paid for 18.
| Component | Full month | 18 of 20 days |
|---|---|---|
| Salary | $2,600 | $2,340 |
| Allowance | $400 | $360 |
| Gross pay | $3,000 | $2,700 |
| Pension, 5% of gross | −$150 | −$135 |
| Income tax withheld, fixed | −$360 | −$360 |
| Social security, fixed | −$180 | −$180 |
| Net pay | $2,310 | $2,025 |
FAQ
Questions, answered
How is loss of pay calculated?
Divide each pro-rated monthly component by the working days in the month and multiply by paid days. Some employers divide by calendar days or a fixed number instead; pick one method, write it into your policy and apply it the same way every month.
Does a half day count as loss of pay?
A half-day absence usually counts as half an unpaid day. In SimpleERP, a half-day attendance mark counts 0.5, and a half-day request for an unpaid leave type also counts 0.5.
Is a bonus cut for loss of pay?
It depends on the component. In SimpleERP each component has a pro-rate setting; a Bonus line is paid in full regardless of unpaid days, and you can switch pro-rating off for any other fixed component.
What if attendance was not marked for a day?
SimpleERP treats unmarked working days as present, so nobody loses pay because attendance was skipped, and flags the payslip as having unmarked days so HR can check before approving the run.
Related
Keep reading
Attendance register
The daily record of each employee's presence, absence and leave, totalled monthly into paid days.
Read morePayslip
The statement of paid days, each earning, each deduction and the net pay an employee receives for a period.
Read moreHR, attendance & leave
Employees, a daily attendance sheet, phone check-in, holidays and leave balances.
Read more
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