How to Calculate Loss of Pay (LOP) and Unpaid Absences in Monthly Payroll
A step-by-step mathematical guide to calculating daily wage deductions for unpaid leaves, half-days, and mid-month joiners.
Table of Contents
1. The Mathematics of Loss of Pay (LOP)
When an employee exhausts their paid leave balance or takes unapproved leave, the employer must deduct those days from their monthly salary calculation.
The two common standard formulas for computing per-day salary are:
- Calendar Days Basis: Per Day Salary = Monthly Gross Salary ÷ Total Days in Month (e.g., 30 or 31). Best for fixed salaried staff.
- Working Days Basis: Per Day Salary = Monthly Gross Salary ÷ Actual Working Days in Month (e.g., 22 days). More accurate for shift-based workers.
- LOP Deduction Formula: Total LOP Deduction = LOP Days × Per Day Salary.
Never Calculate LOP Deductions Manually
Wokaim syncs approved leave balances directly into payroll, computing exact Loss of Pay deductions automatically in 1 click.
Frequently Asked Questions
How does Wokaim handle half-day LOP deductions?
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