Loss Of Pay

What Is Loss of Pay?

Loss of Pay (LOP) pertain to the condition when an employee experiences a cut in their pay as for various reasons including taking unpaid leave, disciplinary action, or absence from work which has no valid reasons. The absence of an employee who decides to stay home without using paid leave benefits such as holidays or illnesses, inevitably leads to a loss of income for being absent for that period. The Employers very often have their formal set of laws that highlight when and how to implement the LOP. Employees must be well informed in regards to these policies to know what is being expected if they are to take unpaid leave. The employee could experience loss of pay which will in turn affect their income and could compel them to carry out strict budgeting to fulfill their financial obligations as income earning is slow.

Example

As in a case when an employee is on unpaid leave for personal purposes being either extended travel or family emergency can be considered as Loss of Pay (LOP). Suppose that a person applied for two weeks leave to care for a family member who has fallen sick, but has spent all their paid time off. In this case, the employer gives the leave but it conditions the employee to be with Loss of Pay for the entire duration of the absence. Consequently, the employee’s monthly pay is reduced by a half in those two weeks since he/she is not working actively and so not entitled to the money. Know-How of the company's LOP policies and preparation for when earnings stops can be a great asset for employees for their financial planning.