Two payroll teams can compute LOP for the same absence and get different numbers. Here's why — and which method to standardise on.
Loss of pay (LOP) is the salary reduction for days an employee neither worked nor had paid leave for. The calculation is simple in shape — per-day pay × unpaid days — but the per-day figure depends on a divisor you choose, and that choice changes the answer by up to 20%. The three candidates are calendar days in the month, fixed 30 days, and actual working days. Below, each is worked through with the same example so you can see exactly what differs.
LOP applies to days that are neither worked nor covered by paid leave. In practice that means:
It does not apply to weekly offs, declared holidays, approved paid leave, or approved work-from-home. Getting this boundary wrong — most often by marking approved leave as absent — is the single most common cause of a wrong payslip, and no divisor choice can rescue it.
Per-day pay = monthly gross ÷ divisor. Your options:
| Calendar days | Divide by the actual days in that month (28, 30 or 31). Per-day pay changes month to month. |
|---|---|
| Fixed 30 days | Always divide by 30, regardless of the month. Per-day pay is constant all year. |
| Working days | Divide by the payable working days in that month, after weekly offs and holidays. Highest per-day value, most variable. |
None is universally "correct" — they are conventions, and each is defensible. What is not defensible is switching between them, or applying different ones to different employees.
Take an employee with a monthly gross of ₹60,000, absent for 2 unpaid days in a month with 31 calendar days, of which 26 are working days (5 weekly offs).
| Calendar days (31) | ₹60,000 ÷ 31 = ₹1,935.48 per day → LOP = ₹3,870.97 → net earnings ₹56,129.03 |
|---|---|
| Fixed 30 days | ₹60,000 ÷ 30 = ₹2,000.00 per day → LOP = ₹4,000.00 → net earnings ₹56,000.00 |
| Working days (26) | ₹60,000 ÷ 26 = ₹2,307.69 per day → LOP = ₹4,615.38 → net earnings ₹55,384.62 |
The spread between the cheapest and most expensive method here is ₹744 on a two-day absence — about 19%. In February the gap widens further: with 28 calendar days and 24 working days, calendar-day per-day pay rises to ₹2,142.86 and working-day per-day pay to ₹2,500.00, so the same two-day absence costs ₹4,285.71 or ₹5,000 depending on the method.
An employee taking two unpaid days in February loses more than for two days in March under both the calendar-day and working-day methods. Under fixed-30, the cost is identical. That predictability is why many small businesses standardise on 30.
A practical way to decide:
Then do three things: write the method into the salary or attendance policy, apply it to every employee without exception, and print payable days on the payslip so the arithmetic is visible. What else the payslip should show is covered here.
In practice, when an employee challenges an LOP deduction, the argument is rarely about the divisor. It is about whether the day should have been unpaid at all: leave that was approved verbally but never recorded, a work-from-home day marked absent, a correction request that was never processed.
Which means the highest-leverage fix is upstream of payroll entirely — approvals that write directly to the attendance record, and a working correction route with a deadline. Get those right and the LOP calculation stops being contentious, because everyone already agrees which days were unpaid.
The same divisor question appears in reverse when hours exceed the day — see how overtime is calculated.
| LOP formula | Per-day pay × number of unpaid days |
|---|---|
| Per-day pay | Monthly gross ÷ divisor (calendar days, fixed 30, or working days) |
| Example spread | ₹60,000 gross, 2 unpaid days, 31-day month: ₹3,871 / ₹4,000 / ₹4,615 |
| Most predictable divisor | Fixed 30 — the same absence costs the same in every month |
| Highest per-day cost | Working days — and it rises further in short months |
| Not LOP | Weekly offs, declared holidays, approved paid leave, approved work-from-home |
| Usual base | Gross earnings, not basic alone — but document whichever you choose |
Loss of pay is calculated as per-day pay multiplied by the number of unpaid days. Per-day pay is the monthly gross salary divided by a chosen divisor — the calendar days in the month, a fixed 30 days, or the actual working days in that month. The divisor you choose changes the result significantly, so it must be fixed in policy and applied consistently.
Both are used and both are defensible. Dividing by a fixed 30 days is the most predictable, because the same absence costs the same amount in every month. Dividing by working days produces the highest per-day figure and makes absences more expensive in short months. What matters most is choosing one method, documenting it, and never varying it between employees or months.
In a 31-day month with 26 working days: dividing by calendar days gives ₹1,935.48 per day and ₹3,870.97 of LOP; dividing by a fixed 30 gives ₹2,000 per day and ₹4,000; dividing by working days gives ₹2,307.69 per day and ₹4,615.38. The spread between methods is about 19% for the same absence.
Not normally. Weekly offs, declared holidays, approved paid leave and approved work-from-home are all paid and are not LOP days. Some policies treat a holiday sandwiched between two absences as unpaid, but that is an explicit policy choice that must be written down rather than applied case by case.
Most employers apply loss of pay to gross earnings, so the deduction reflects the full value of the day. Applying it only to basic salary makes the deduction substantially smaller and is unusual. Either way, document which base you use so the payslip arithmetic can be reproduced by the employee.
Most disputes are about whether a day should have been unpaid at all, not about the arithmetic. Make sure leave and work-from-home approvals write directly to the attendance record, provide a correction route with a clear deadline, and print payable days, days paid and LOP days on the payslip so the calculation is visible.
Merik computes payable days from the attendance register itself — present days, approved paid leave and work-from-home count as paid; absent days, unpaid leave and the unpaid part of a half-day reduce the month. The salary calculation then runs server-side in a secured function rather than in the browser, so the same rules apply to every employee, every month.
Because leave and WFH approvals update the attendance record directly, the most common cause of a wrong LOP deduction — approved leave sitting in a chat thread and never reaching the register — largely disappears. Payable days, days paid and LOP days are printed on the payslip, so an employee can check the arithmetic themselves. See the payroll and attendance modules, the feature list, or how it works.
The line items a payslip needs so an employee can check their own pay.
How connecting attendance and leave directly to payroll removes errors.
Twice the ordinary rate on monthly wages ÷ 208 — and the records that make it defensible.