LOP Calculation in India: Loss of Pay Formula and Examples

LOP (loss of pay) is calculated by dividing monthly earnings by a divisor and multiplying by the unpaid days: LOP = (monthly earnings ÷ divisor) × LOP days. The divisor is whatever the payroll policy fixes, usually calendar days, a flat 30, a flat 26 or the month's working days. The Code on Wages sets no divisor, though a state minimum wage notification can: Haryana's notification of 9 April 2026 calculates deductions at monthly wages ÷ 30. What the Code does set is a ceiling: under section 20 of the Code on Wages, 2019, the deduction cannot be a larger share of the month's wages than the absence is of the time the employee was required to work.

That ceiling is where most LOP problems start. The same two days of absence on a ₹36,000 salary cost an employee anything from ₹2,400 to ₹3,600 depending on the divisor, and a divisor that looks harmless in one month can deduct more than the law allows in the next. Add a mid-month joiner, a half-day, a missed biometric punch found after the cut-off, and the PF and ESI figures that follow paid days, and LOP becomes a line on the payslip that employees often query.

This post is for whoever runs payroll or writes the payroll policy, and for an employee checking an LOP line on their own salary slip. Jump to the formula if you need the arithmetic, to the worked example to see four divisors side by side, to joiners and leavers if the numbers will not reconcile, or to the sample clauses if you are drafting.

Nothing here is legal or tax advice. Deductions for absence are governed by the Code on Wages, 2019, in force since 21 November 2025, and leave entitlements and weekly offs still come from the state Shops and Establishments Act, standing orders and your employment contracts. Have the policy reviewed against the rules that apply to your establishment. Law as at 9 November 2026.

What is LOP in salary, and how is it different from LWP?

Loss of pay is pay withheld for days an employee was absent with no paid leave to cover them. It is what is left after casual leave, earned leave, compensatory offs and attendance regularisation have absorbed an absence. On a salary slip it usually appears twice: as LOP days in the attendance block, and as a lower paid-days figure or a separate LOP deduction line. Paid days are the days in the pay period less the LOP days.

Three terms get mixed up, and they come from different places.

For pay, LOP and LWP work identically: both are unpaid days at the same rate. The difference is disciplinary. Approved leave without pay is not misconduct. Absence without approval can be treated as unauthorised absence under the standing orders or service rules. Both feed the NCP figure in the PF return, which is covered in our guide to NCP days in PF.

What is the formula for LOP calculation?

LOP = (monthly earnings subject to attendance ÷ divisor) × LOP days. Earnings subject to attendance normally means gross fixed pay: basic, dearness allowance, HRA, special allowance and the other fixed allowances. Reimbursements paid against bills, and variable pay with its own rules, are not reduced by attendance. A fuel bill settled against receipts is not earned by the day, and scaling it down for absence is a common error.

The divisor is where companies differ, and the choice is usually the company's to make. Check the state minimum wage notification first: Haryana's, for example, says deductions are calculated at monthly wages ÷ 30 for the employments it covers.

All four are lawful if the policy states the basis, it is applied the same way to everyone in every month, and the result stays within the section 20 ceiling explained in the next section.

For LOP calculation in Excel on the calendar basis, with gross pay in B2, any date in the pay month in C2 and LOP days in D2, the formula is =ROUND(B2/DAY(EOMONTH(C2,0))*D2,2). For a working-days divisor on a five-day week, replace DAY(EOMONTH(C2,0)) with NETWORKDAYS(EOMONTH(C2,-1)+1,EOMONTH(C2,0),Holidays), where Holidays is a range listing the paid holidays. For a six-day week with Sunday off, use NETWORKDAYS.INTL with weekend code 11 in the same position. The salary calculator gives the monthly gross to start from.

What does the Code on Wages say about deducting pay for absence?

It allows the deduction, caps it in proportion to the absence, and caps all deductions together at half the month's wages. The Code on Wages, 2019 came into force on 21 November 2025 and repealed the Payment of Wages Act, 1936, which had the same structure. Five provisions matter for LOP.

The section 20 test takes one line to run. Count the days the employee was required to work in the month, which excludes weekly offs and paid holidays. Divide the LOP days by that number. That fraction of the month's wages is the most that can be deducted. Two days absent out of 20 required days caps the deduction at 10% of the month's wages, whatever divisor the policy uses.

Section 20 has two narrow additions. Its Explanation treats an employee who is present but refuses to work, in a stay-in strike or for any other cause that is not reasonable, as absent. Its proviso allows a deduction of up to eight days' wages in lieu of notice where ten or more employees, acting in concert, absent themselves without due notice and without reasonable cause, if the contract provides for it. Under rule 17 of the Code on Wages (Central) Rules, 2026, the employer must first give each employee seven days to reply before making that deduction. Neither is a general licence to deduct more than the absence.

Getting this wrong has a price. Under section 45, the authority hearing a claim for unauthorised deductions can order compensation of up to ten times the claim determined, on top of the claim itself.

How much does the divisor change the deduction?

By as much as half again. In the example below, the same two days cost between ₹2,400 and ₹3,600.

Priya is an executive at a Bengaluru software company on a gross salary of ₹36,000 a month and a five-day week. In February 2026 she is absent for two days without leave. February 2026 has 28 days and, with no paid holiday on a weekday, 20 working days.

The section 20 ceiling is 2 ÷ 20, or 10% of ₹36,000, which is ₹3,600. All four results are within it, and the working-days method sits exactly on it. The spread between the cheapest and the most expensive method is ₹1,200 for the same two days. That is why the divisor belongs in the payroll policy and the appointment letter, where every month's run can follow it.

The live LOP glossary entry runs the same comparison on a ₹45,000 salary in a 31-day month with 26 working days, where one day costs ₹1,451.61, ₹1,500.00 or ₹1,730.77.

Which LOP divisor should a company use?

Calendar days is the safest choice, because it can never breach section 20. The employee is never required to work more days than the month has, so a day's pay on the calendar basis is always at or below the ceiling. A 31-day month gives a slightly smaller deduction per day and February a slightly larger one, and the deduction stays proportionate in every month.

Working days is the most precise and the most expensive for the employee. It deducts exactly the section 20 ceiling, never more, provided payroll knows each employee's weekly-off pattern and the holiday calendar for their location. Its weakness is administrative: an employee on a different shift pattern has a different divisor, and the policy has to say so.

Fixed 30 is simple and stays within section 20, but it breaks at the edges of the month. In a 31-day month, an employee absent for the whole month has 31 days deducted at one-thirtieth each, which is more than the month's salary. In February, the same employee absent all month keeps two days' pay for no work. The policy needs a rule for both cases, usually that a full month of absence means nil pay and that LOP days are capped at 30.

Fixed 26 is the one to check. It suits a six-day week in most months, but in a 31-day month with only four Sundays and no paid holiday, a six-day worker is required to work 27 days, and one twenty-sixth is more than one twenty-seventh. July 2026 is such a month. On wages of ₹26,000, one day of absence costs ₹1,000.00 on the 26-day divisor, while the section 20 ceiling is ₹26,000 ÷ 27, or ₹962.96. The excess is ₹37.04 a day. It is small, it is still a deduction the Code does not allow, and across a factory payroll it is a pattern a claims authority can multiply. A policy that keeps the 26-day divisor should cap the per-day deduction at the section 20 figure in those months.

The divisor that causes real damage is a flat number below the required working days. A factory on a six-day week that divides by 22, a figure borrowed from a five-day office, deducts ₹1,181.82 a day on the same ₹26,000 when the ceiling is between ₹962.96 and ₹1,083.33 depending on the month. That is an over-deduction in every month of the year, including February.

How do you calculate LOP for a mid-month joiner or leaver?

Use the same method you use for LOP, because the two are the same calculation. A joiner is paid for the days employed, and a leaver for the days up to the last working day. The days outside employment are either unpaid days deducted from a full month or days left out of the paid count, and the policy has to pick one.

Arjun joins a Pune manufacturing company on 10 March 2026 at a gross salary of ₹45,000 a month. He is employed for 22 of March's 31 days, and the first 9 days fall before he joined.

On calendar days the two approaches give the same answer, because 22 ÷ 31 and 1 − 9 ÷ 31 are the same number. On fixed 30 they never meet in a 31-day month, and the gap here is ₹1,500. A company that pays joiners on paid days and deducts absence as LOP is paying two people differently for the same number of days worked. Pick one approach, write it into the policy, and use it for joiners, leavers and LOP alike.

The leaver is the same problem in reverse. An employee whose last working day is 12 November 2026 is paid for 12 of November's 30 days, which on the calendar basis is 12 ÷ 30 of the month's gross. The NCP figure for the PF return follows the same day count, and the NCP days guide sets out why the joiner and leaver have to be reported the same way.

How does LOP affect PF, ESI, professional tax and TDS?

Every deduction calculated on wages actually paid falls with LOP, so a month with heavy LOP lowers all of them.

Employee PF is 12% of the PF wages earned in the month. From 17 September 2026 the wage ceiling is ₹25,000, and both the wages and the ceiling are prorated for NCP days. Take PF wages of ₹20,000 (wages under section 2(88) of the Code on Social Security, 2020, here basic and DA with nothing added back) in November 2026, a 30-day month, with 2 LOP days on the calendar basis. PF wages earned are ₹20,000 × 28 ÷ 30, or ₹18,666.67, so employee PF is ₹2,240.00 instead of ₹2,400.00, and the ECR shows 2 NCP days. The PF calculation guide covers the employer's split between EPS and EPF.

ESI contributions are 0.75% from the employee and 3.25% from the employer, on wages paid for the contribution period, for employees whose wages are within the ₹21,000 coverage ceiling. Since 21 November 2025 ESIC reads wages as defined in section 2(88) of the Code on Social Security, 2020, so the base is ESI wages, which can differ from gross pay. On ESI wages of ₹18,000 with the same 2 LOP days, wages paid are ₹16,800, the employee's contribution falls from ₹135.00 to ₹126.00, and the employer's from ₹585.00 to ₹546.00. Our ESI calculation guide has the coverage rules.

Professional tax follows each state's slabs, and most states read the slab off the month's earnings. A month with heavy LOP can drop an employee into a lower slab, or below the threshold altogether, so PT should be computed after LOP each month instead of being copied from the previous month.

TDS follows the projection. Lower salary paid this month lowers projected annual income, and payroll should re-project and spread the remaining tax over the remaining months rather than keep deducting on the April estimate. Our guide to TDS on salary covers how the monthly projection works.

Section 18(2)(b) lists deductions for absence among the deductions that section 18(3) caps at 50%, but the Code does not say how the cap works in a month where the absence alone is more than half the month. The common payroll approach applies the cap to the wages payable after LOP and counts PF, PT, TDS and any instalment against it. On that approach, in a month with heavy LOP and a loan instalment running, the cap falls with the wages and the instalment has to shrink to fit. Agree the approach with your adviser and use it the same way every month.

How should half-days, late marks and sandwiched weekends be handled?

Half-days and late marks have to be proportionate to the time missed. Sandwiched weekends turn on what the employment terms say.

A half-day absence is half a day's pay at the policy's divisor. Rounding half-days up to full days deducts pay for time the employee worked, which section 20 does not allow. The PF return is a different matter: the NCP field takes whole numbers only, so the policy has to state how half-days are rounded for the ECR, separately from how they are paid.

Late-mark rules need the most care. A common rule converts three late marks into half a day of LOP. Three late arrivals of ten minutes each are thirty minutes of absence, and half a day is four hours or more. Section 20 permits a deduction for absence for any part of the required period, but only in proportion to it, so a deduction for thirty minutes has to be priced as thirty minutes. Anything beyond that is a penalty, and a penalty for lateness is a fine under section 19. A fine needs a notice of acts and omissions approved by the appropriate Government or the prescribed authority, a chance to show cause, and a cap of 3% of the month's wages. Handle persistent lateness as a conduct issue, through warnings and the disciplinary process, and keep it out of the LOP line.

Sandwiched weekly offs are a policy choice, and a written one. Under the payroll version of a sandwich leave policy, an employee absent without leave on a Friday and the following Monday also loses pay for the Saturday and Sunday. Run the section 20 numbers before you adopt it. Priya, in February 2026, with two days of absence and two sandwiched weekend days, would lose four days at ₹1,285.71, which is ₹5,142.86 or 14.3% of her monthly wages. She was required to work 20 days and missed 2, so the section 20 figure for her absence is 10%, or ₹3,600.

The Code does not settle whether that gap is unlawful, and the two readings point in different directions. On one reading, section 20 measures the deduction against the days the employee was required to work, a weekly off is not one of them, and a monthly salary already pays for it, so withholding it is a deduction above the ceiling. On the other, the weekend pay was never earned: rule 6 of the Code on Wages (Central) Rules, 2026 grants the weekly rest day only to an employee who has worked for the same employer for six continuous days in a six-day week, or the stipulated days in a shorter week, with leave and holidays counted as days worked. An employee absent without leave on the Friday before the weekend has not met that condition for that weekend; the Monday absence counts towards the following week's rest day. Rule 6 also says it does not cut down more favourable terms in a contract, and a monthly salary that pays every day of the month is one such term unless the contract itself makes weekend pay conditional. The Central Rules apply directly only where the Central Government is the appropriate government, and each state's own wage rules govern everyone else.

The practical answer works under both readings. A sandwich deduction that keeps the month's total for absence within the section 20 figure is safe either way. A deduction above it depends on the employment terms saying, in terms, that pay for a weekly off or holiday is conditional on attendance on the working days around it, and it is the part of an LOP policy most likely to be tested if an employee files a claim. If the policy goes that far, the condition belongs in the appointment letter or standing orders as well as the leave policy.

Without a written rule, weekly offs and paid holidays next to an absence stay paid days. They are not LOP and they are not NCP days.

How do you reverse LOP after the payroll cut-off?

Pay it back as an arrear in the next payroll, at the same rate it was deducted. Reopening a closed month changes a wage slip that has already been issued and a return that has already been filed, while an arrear keeps every document matching what was actually paid.

A Chennai logistics company closes attendance on the 25th of each month. Ravi earns ₹28,000 gross. On 22 April 2026 he is on a client visit and misses his biometric punch, so the system marks him absent. April payroll runs with one LOP day at ₹28,000 ÷ 30, which is ₹933.33. On 29 April, after the run, his manager approves the attendance regularisation. May payroll carries an LOP reversal of ₹933.33 as an arrear line, worked out on April's divisor rather than May's 31 days, because the reversal undoes April's deduction. The arrear is wages, so PF and ESI are due on it in the May run.

Two rules keep reversals clean. The reversal uses the divisor of the month the deduction was made in. And a regularisation request has a fixed window, such as up to the attendance cut-off or a set number of working days after the absence, after which it waits for the next cycle. Publish both to employees and managers. An employee who cannot correct a wrong absence before payroll locks will raise it on payday instead, and every late correction leaves an NCP day on a filed ECR for a day that was in fact paid. Our attendance policy guide covers how cut-offs and regularisation windows are usually worded.

How is LOP treated in the full and final settlement?

The same way as any other month, counted up to the last working day only. Use the payroll policy's divisor, deduct the unpaid days in the final month, and pay the result within two working days of the exit, as section 17(2) of the Code on Wages requires on resignation, removal, dismissal or retrenchment.

Two things are not LOP and should not be booked as LOP. Unserved notice is a separate recovery under the contract, worked out on its own basis, and the notice period calculator handles the dates. Unused earned leave encashed at exit is paid on top and is not reduced by the final month's absences. Keeping all three on separate lines in the full and final settlement is what lets an employee, or an inspector, check each one.

The 50% cap applies to the final wages as well. Where a notice recovery and an outstanding advance both fall in the last month, the deductions together cannot exceed half the wages payable for that period after LOP, on the approach in section 7, and there is no later month to carry the excess into.

What should the LOP clause in a payroll policy say?

It should say how a day's pay is worked out, what it applies to, when absence becomes LOP, how part-days and corrections are handled, and what the employee sees. The sample below is written to be edited. Every bracketed item is a decision for you to make before you use it.

Clause 1, basis. A day's pay is the employee's monthly earnings subject to attendance divided by [the number of calendar days in the month]. The same basis applies to absence, to employees who join or leave during a month, and to reversals of loss of pay.

Clause 2, earnings affected. Loss of pay reduces [basic pay, dearness allowance, house rent allowance, special allowance and other fixed allowances]. It does not reduce reimbursements paid against bills or [variable pay, which follows its own plan].

Clause 3, when absence becomes loss of pay. An absence is first adjusted against [available casual leave, earned leave and compensatory offs], in that order, and any regularisation approved before the attendance cut-off. Only the remaining days are treated as loss of pay. A month in which the employee is absent for every day is paid at nil.

Clause 4, part-days and lateness. Absence for half a working day is deducted as half a day's pay. Late arrival is not converted into loss of pay. Persistent lateness is handled under the disciplinary procedure.

Clause 5, cut-off and corrections. Attendance for each month closes on the [25th]. A regularisation approved after the cut-off is paid as an arrear in the next payroll at the rate at which the day was deducted.

Clause 6, limit. In any month, the deduction for absence will not exceed the proportion of the month's wages that the days of absence bear to the days the employee was required to work in that month.

Clause 7, visibility. Each wage slip shows the days in the pay period, the loss-of-pay days, the paid days and the amount deducted, and identifies the month to which any loss of pay or reversal relates.

Do not drop clauses 1 and 6 when editing. Clause 1 is what makes the same absence cost the same in every month and for every employee, and clause 6 is section 20 written in terms an employee can read, which protects the company if a divisor ever produces a figure above the ceiling. If you are starting from our HR policy template, put these clauses in the compensation or payroll section, next to the pay terms they depend on.

What do employers ask most about LOP?

How is LOP calculated in salary?

Divide the monthly earnings that depend on attendance by the divisor in your payroll policy, which is usually calendar days, 30, 26 or the month's working days, and multiply by the LOP days. On ₹30,000 with 2 LOP days in a 30-day month on the calendar basis, the deduction is ₹2,000. Whatever the divisor, section 20 of the Code on Wages, 2019 caps the deduction at the share of the month's wages that the absence is of the days the employee was required to work.

Is LOP calculated on 30 days or 26 days?

Either is lawful if the policy states it and it is applied consistently, unless a state minimum wage notification fixes the divisor for deductions, as Haryana's does at 30. Twenty-six is common in six-day-week factories and gives a higher deduction per day than 30. It needs a check in 31-day months with only four Sundays and no paid holiday, when a six-day worker is required to work 27 days and one twenty-sixth of the month's wages is more than section 20 allows for one day's absence. Calendar days never has that problem.

What does LOP days in a salary slip mean?

The number of days in the pay period for which you were not paid because no paid leave, compensatory off or regularisation covered them. Paid days are the days in the pay period less the LOP days. If the figure looks wrong, check first whether an absence was marked from a missed punch, and ask for it to be regularised; an approved correction after the cut-off is normally paid back as an arrear in the next payroll.

Is LOP deducted from basic or gross salary?

Usually from gross fixed pay, meaning every fixed component that depends on attendance: basic, dearness allowance, HRA, special allowance and other fixed allowances. Reimbursements paid against bills are not reduced. Because PF is calculated on PF wages actually earned (basic and DA, plus any amount added back under section 2(88) of the Code on Social Security), LOP also reduces the PF contribution, but the LOP deduction itself is taken from the whole fixed gross.

Does LOP affect PF?

Yes. Employee and employer PF are calculated on PF wages actually earned, so LOP reduces both, and from 17 September 2026 the ₹25,000 wage ceiling is prorated by the same days. The unpaid days are reported in the ECR as NCP days, counted on the calendar days of the wage month and in whole numbers.

Can an employer deduct pay for weekends during LOP?

Yes, but only under a written sandwich rule in the employment terms. Without one, a weekly off next to an absence is a paid day and is neither LOP nor an NCP day. With one, a deduction that keeps the month's total within the section 20 figure, which is measured against the days the employee was required to work, is safe. A deduction above that figure relies on the terms making weekend pay conditional on attendance, an argument rule 6 of the Code on Wages (Central) Rules, 2026 supports because it ties the weekly rest day to six continuous days of work, or the stipulated days in a shorter week, before the rest day. The Code does not settle the point, so that part of a sandwich rule is the most exposed if challenged.

Can late marks be converted into LOP?

Yes, but only for the time actually missed. Section 20 of the Code on Wages allows a deduction for absence for any part of the required working time, in proportion to it. A rule that turns three short late arrivals into half a day's pay deducts more than the absence, and the excess is in substance a fine, which section 19 permits only under a notice approved by the appropriate Government or the prescribed authority, after a chance to show cause, and within 3% of the month's wages.

What is the difference between LOP and LWP?

Both are unpaid days at the same rate. Leave without pay is unpaid leave a manager approved, usually after the paid balance ran out. Loss of pay usually covers absence without approval or without a leave balance. The difference matters for disciplinary action and makes no difference on the payslip, and both are reported as NCP days in the PF return.

How do you set up LOP calculation in payroll?

Start with the divisor, because every other number on the payslip depends on it. Do these in order:

• Choose the divisor and write it into the payroll policy and the appointment letter, using the clauses in section 11.
• Run the section 20 check for each weekly-off pattern you have, with the month that has the most required working days, and confirm a day's deduction never exceeds the ceiling.
• List the components LOP reduces and the ones it does not, and configure payroll to match.
• Publish the attendance cut-off and the regularisation window to employees and managers.
• Move any late-mark penalty out of LOP: price lateness as time missed, or handle it through the disciplinary process.
• Before each run is released, sort employees by LOP days and check the top ten against attendance and leave.
• Pass the result through to PF NCP days, ESI wages, professional tax and the TDS projection, and process approved reversals as arrears in the next run.

LOP errors are often data errors, such as a missed punch, a leave approval that came late, or one team on a different divisor, and they are fixed upstream in attendance and leave before payroll runs. Engage's payroll software takes approved leave, LOP days and regularisations straight from attendance and leave management into the payroll run, and arrears can be added as a monthly input. PF, ESI, professional tax and TDS are computed in the same run, and the ECR comes from the figures on the payslip. Attendance covers shifts and biometric punch-ins, and pricing is on the site.

Related reading: how to calculate payroll in India, attendance compliance under the Labour Codes, and the payroll compliance checklist.

Sources

• Code on Wages, 2019. India Code. Section 17(2) on payment of wages on exit; section 18(2)(b) on deductions for absence and section 18(3) on the 50% cap; section 19 on fines; section 20 on deductions for absence from duty, with its proviso and Explanation; section 45(2) on compensation of up to ten times the claim determined; section 50 on registers and wage slips. In force from 21 November 2025.
• Code on Wages (Central) Rules, 2026. G.S.R. 343(E), Gazette of India, 8 May 2026. Rule 6 on the weekly day of rest, the six continuous days condition, wages for the rest day and the saving for more favourable terms; rule 14 on the authority approving acts and omissions for fines; rule 17 on intimation before a deduction under the proviso to section 20(2).
• Haryana minimum wages notification No. 2/25/26-2 Lab, 9 April 2026. Note 7: per-day wages at monthly ÷ 26, deductions at monthly ÷ 30.
• S.O. 5109(E), 17 September 2026. ₹25,000 PF wage ceiling under section 2(89) of the Code on Social Security, 2020. EPFO: employee contribution of 12% of PF wages; NCP days in the ECR.
• Employees' State Insurance Corporation, contribution. Contribution rates of 0.75% for employees and 3.25% for employers; the ₹21,000 coverage ceiling per the ESIC Standard Note (1 January 2026); wages under section 2(88) of the Code on Social Security, 2020 per the ESIC circular of 11 December 2025.