Understanding Loss of Pay: How Does It Affect Salary Components in Different Situations?

Dear Members,

I have gone through some of the threads on loss of pay, and now I'm confused. In my organization, there are 3 situations when the employee has loss of pay:

1. Late attendance
2. Availing leaves after his/her paid leaves have exhausted.
3. Some disciplinary non-conformity

What I have gathered is that the loss of pay affects all the components of the salary and also the PF calculation. But does it apply to all the above 3 situations? In one of the threads, I read that for point 2, i.e., loss of pay on leaves, it only affects the Basic and DA. I would request all of you to bring in some clarity.

Also, the salary components here are:
- Basic: 40% of Gross
- HRA: 50% of Basic
- Conveyance: Rs 800/-
- Special allowance and Metro city allowance: Balance

Please help :confused:

Thanks in advance,
Sukanya

Dear,

There are two things:

1. Deduction for any disciplinary action or lateness.
2. Leave without pay due to any reason.

In Case 1 - You can prepare the full salary and then deduct some amount due to any reason. In this case, you have to pay all allowances and benefits like PF, Bonus, etc., but in the other case, if you give LOP, then you have to deduct all allowances and benefits like PF, Bonus, etc.

If you have any other confusion, please write to me.

Aashit

Hi Sukanya,

Thank you for your message. I would be happy to assist you with your query.

Could you please provide more context or details regarding the specific components you are referring to? This will help me give you a more accurate answer.

In general, when considering deductions in the basic salary, it is important to understand the implications on other components like PF contributions. Ideally, deductions in the basic salary should not affect PF contributions. If necessary, deductions can be made from other components such as HRA, Special grade, Metro city allowance, or Conveyance allowance.

Please let me know if you need further clarification or guidance on this matter.

Best regards,
Aashit

Dear,

Some amount can be deducted from the deduction column, which will not affect the employee's salary.

If you give LOP/LWP, you have to deduct all components of the salary, including PF and Bonus as well.

Aashit

Hi,

When allowances are linked to the number of days present, it will affect allowances such as basic pay, DA, and obviously PF and bonuses if the person is marked absent for whatever reason mentioned by Aashit.

Regards, Harshad

Leave Without Pay is basically deducted from the basic salary. Since Dearness Allowance (DA) and House Rent Allowance (HRA) are also linked to the Basic salary as a percentage, when a deduction is made from the basic salary, DA and HRA will also be reduced proportionately. Consequently, the Employee Provident Fund (EPF) and Employee State Insurance (ESI) contributions will also decrease.

Regarding City Compensatory Allowance (CCA), one or two days of Leave Without Pay will not affect CCA payments; the full amount of CCA will be paid (subject to the company's policy). However, for a substantial period of Leave Without Pay, there will be a proportionate reduction in CCA.

It is important to note that after being on Leave Without Pay for one month, one should not expect to receive Sunday wages, HRA, and CCA from the company.

Regards,
Madhu T.K

Can anyone please let me know, "If an employer has not paid the salary for several months and, as a result, employees are not coming to work because they do not have money to come to the office, will it be considered as LOP/LWP?"

I have doubts regarding payroll. If the amount of an employee appears in the "Other Deduction" column, will it affect the PF amount? Please let me know the answer. Please assist me.

Thank you.