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Recruitment Glossary

Loss of pay

Loss of pay, often recorded as LOP, is an unpaid payroll outcome for a period when an employee receives no wages or reduced wages under an applicable absence, attendance, leave, suspension, industrial-action, or other rule. The label describes a pay result and does not by itself establish misconduct or authorise a deduction.

Recruiter Focus

Recruiters should explain unpaid leave or attendance conditions accurately and avoid exposing an employee’s LOP history during internal selection unless a lawful, necessary criterion applies. Payroll, HR, and managers need one authorised code, reason, dates, approvals, and employee communication.

Why Loss of pay Matters

Incorrect unpaid time directly affects livelihood, tax, social contributions, benefits, overtime, leave accrual, and final pay. A generic code can hide whether the cause was exhausted leave, an unapproved absence, a payroll error, a protected event, or an agreed arrangement.

Terms Recruiters Commonly Compare

Salary deduction

A deduction removes an amount otherwise due under an authorised basis. Loss of pay may instead reflect that pay did not accrue for unworked or unpaid time; local law determines treatment.

Unpaid leave

Unpaid leave is an authorised absence without normal wages. Loss of pay is the payroll result and can arise from unpaid leave or several other circumstances.

Recruitment Example

An employee takes two approved personal days after paid entitlement is exhausted. HR records authorised unpaid leave, payroll shows the calculation and dates, and the payslip provides a query route. The absence is not copied into a disciplinary or internal-recruitment record.

Implementation Playbook

  • Identify the legal, contractual, policy, collectively agreed, or employee-authorised basis before reducing pay.
  • Use precise reason codes that distinguish approved unpaid leave, unauthorised time, no work, suspension, correction, and other cases.
  • Explain dates, hours, rate, benefit effect, recovery timing, and challenge route before or promptly after processing.
  • Reconcile time, leave, payroll, manager approval, and employee records while restricting sensitive reasons.
  • Correct errors quickly and assess downstream tax, benefits, contributions, final pay, and reporting.

Common Mistakes

  • Using LOP as an automatic punishment without a lawful process.
  • Making a deduction because a manager entered an absence code incorrectly.
  • Sharing health or family reasons on widely visible payroll reports.
  • Assuming unpaid time is calculated identically for salaried and hourly workers everywhere.

Metrics to Track

Unpaid-pay records with valid basis Payroll queries and corrections LOP value and duration by reason Downstream adjustments completed

Questions Recruiters Ask

Is loss of pay a disciplinary action?

Not inherently. It is a pay outcome. The underlying absence or conduct may be handled separately through an appropriate process.

How is LOP calculated?

The method depends on wage type, hours, contract, payroll period, policy, collective agreement, and local law. Employers should publish and apply the authorised calculation consistently.

Can loss of pay be corrected?

Yes, when the basis, time, approval, or calculation was wrong. Correction should cover the wage and any affected tax, contributions, benefits, accruals, and records.

Sources and Review

ATZ CRM Recruitment Editorial Review · Reviewed 2026-08-05

Acas: Pay during unauthorised absence Acas: Deductions from pay and wages

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