Confused About Loss of Pay Deductions? Let's Break Down How It Affects Your Salary

Can someone please guide me on the calculation of Loss of Pay (LOP) for regular full-time employees? Is it deducted from Net Salary or Gross Salary?

Example Calculation

Ex: A is having -
Cost to company - 29,820,
Gross salary - 28,000,
PF by Employee - 1,680
Professional Tax - 200
LOPs - 2

How should the Net Salary be calculated?

What is salary?

Gross salary only. CTC is the cost of employing a person and that shall include the salary payable to him, additional amounts payable to him as per law, i.e., PF, ESI, Bonus, etc. Net salary is the salary that he earns after deducting the contributions that an employee should contribute towards social welfare schemes like ESI, PF, etc., and the tax he is supposed to pay. Therefore, the gross salary will qualify for deduction of pay if he is absent on any day. In your case, it should be Rs 28,000.

(I don't know how you arrived at Rs 29,820 as CTC. If the employer's share of PF is similar to the one contributed by the employee, it should be Rs 1,680 and as such the CTC should be Rs 29,680. I believe you have included something else, like the monthly element of bonus or gratuity...?)

Hello Sir, The salary breakup for the same is below, and I have attached the Excel Sheet as well. Please guide me on where I am going wrong in this:

- Gross: 28,000
- Basic: 14,000
- HRA: 7,000
- Conveyance: 1,600
- Medical allowance: 1,250
- Employee Contribution: 1,680
- Professional Tax: 200
- Employer Contribution: 1,680
- EDLI 1%: 140
- CTC (Gross + Employer Contribution + ESI): 29,820

Thank you.

Ok, you have taken EDLI and admin charges payable by the employer as part of CTC.

In your calculation sheet, the number of days worked is missing. You should have separate columns for each component of salary with structured salary and earned salary. The structured salary is the salary as per the structure, and the earned salary is the structured component for the number of days worked. Then it will automatically calculate the LOPs, and you will get the net salary after deduction of LOP.

Detail Fixed Total Present Earnings

Days Days

BASIC 14000 30 28 13067
HRA 7000 30 28 6533
CONV 1600 30 28 1493
MEDICAL 1250 30 28 1167

Gross 23850 22260
PF 1680 1569
PT 200 200

Net Pay 21970 20491

In the given data, PF contribution is not correct. Based on the Apex court verdict, PF Gross = Basic + Conv + Medical = 14000 + 1600 + 1250 = 16850/-, and PF contribution should be on 16850/- per month. If the organization restricts it up to the statutory limit, then it will be 15,000/- per month.

Therefore, according to the calculation made by Mr. H R Mohankumar, the PF gross portion will be 15727 instead of 13067 after 2 days of LOP. If the organization restricts to the statutory limit, it will be 15,000 as it is more than 15000. Therefore, the PF Contribution will be 12% of 15000 = 1800/-.

S K Bandyopadhyay (Howrah, WB) CEO-USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] USD HR Solutions – To Strive toward excellence with effort and integrity

Ensure single line breaks between paragraphs.