Hi all,
I would like to know how the loss of pay is calculated for a person who has not served their notice period. For example, if the notice period is one month and the person has only served a week, how should the deduction from their salary be calculated?
Thank you,
Roopa
From India, Bangalore
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19I would like to know how the loss of pay is calculated for a person who has not served their notice period. For example, if the notice period is one month and the person has only served a week, how should the deduction from their salary be calculated?
Thank you,
Roopa
From India, Bangalore
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Hi I know that but you have any software for calculating? Are you update your register monthly? Rishee
From India, Pune
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From India, Pune
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no there is no software for this.. its calculated on monthly basis...and ours is a samll IT company with 35 ppl
From India, Bangalore
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From India, Bangalore
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Dear Roopa,
Please refer to the employment letter being given to the ex-employee to determine whether deductions would be made on the basic or gross salary for the loss of days. Let's assume an employee has served a 7-day notice period when they were meant to serve a 30-day notice period. You need to calculate the number of days they have not put in, i.e., 30 - 7 = 23 days. Therefore, you would deduct the salary for 23 days either from their basic salary or gross salary as agreed upon during their recruitment.
These calculations will be part of their Full & Final settlement. If the amount can be deducted from their dues, that would be ideal. Otherwise, you can also send a notification to their next employer.
Please let me know if you need further information.
Regards,
Sunaina
From India, Chandigarh
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Please refer to the employment letter being given to the ex-employee to determine whether deductions would be made on the basic or gross salary for the loss of days. Let's assume an employee has served a 7-day notice period when they were meant to serve a 30-day notice period. You need to calculate the number of days they have not put in, i.e., 30 - 7 = 23 days. Therefore, you would deduct the salary for 23 days either from their basic salary or gross salary as agreed upon during their recruitment.
These calculations will be part of their Full & Final settlement. If the amount can be deducted from their dues, that would be ideal. Otherwise, you can also send a notification to their next employer.
Please let me know if you need further information.
Regards,
Sunaina
From India, Chandigarh
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Hey you missed out one point on full and final settlement you also take into consideration the PL leave into it. Regards, Derek
From India, Nagpur
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From India, Nagpur
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Just a point for you to note:
LOP or 'Loss Of Pay' has reference to 2 situations:
1) When an existing employee takes a long leave, e.g., an employee may go on maternity leave and could exceed the maternity leave limit. In these cases, you need to have a clear policy that states that over and above the approved leave or the limit under a category of leave (such as Maternity Leave), the LOP will be based either on basic or on the full gross.
2) When there is a shortfall in the notice period, typically, the shortfall will be adjusted in the FFS (Full and Final Settlement). In real terms, this is not LOP. It's technically called a shortfall in the notice period that may be adjusted.
Please note, many companies make an unfair mistake when it comes to the adjustment of the shortfall and LOP, namely, they calculate these on the gross. However, when it comes to leave encashment, they calculate it on basic. This is seen as an unfair practice towards employees. Please be aware of it and adopt a balanced view and best practice.
Best wishes.
SK
From India, Bangalore
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LOP or 'Loss Of Pay' has reference to 2 situations:
1) When an existing employee takes a long leave, e.g., an employee may go on maternity leave and could exceed the maternity leave limit. In these cases, you need to have a clear policy that states that over and above the approved leave or the limit under a category of leave (such as Maternity Leave), the LOP will be based either on basic or on the full gross.
2) When there is a shortfall in the notice period, typically, the shortfall will be adjusted in the FFS (Full and Final Settlement). In real terms, this is not LOP. It's technically called a shortfall in the notice period that may be adjusted.
Please note, many companies make an unfair mistake when it comes to the adjustment of the shortfall and LOP, namely, they calculate these on the gross. However, when it comes to leave encashment, they calculate it on basic. This is seen as an unfair practice towards employees. Please be aware of it and adopt a balanced view and best practice.
Best wishes.
SK
From India, Bangalore
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Dear Roopa,
Providing you an example:
Name of the staff: ABC
DOJ
Basic: 5000
H.R.A: 2500
Conveyance: 800
Special Allowance: 1000
Earnings (A): 9300
Medical: 0
LTA: 0
Earnings (B): 0
P.F: 600
P.T: 175
Total Deductions: 775
Net Payable: 8525
Date of resignation: 05/05/2007
Last Working Day: 31/05/2007
Salary pending: 8525
Leave Encashment: 7750 25 Days
Total Payable: 16275
Absence of Notice period: 1240 4 Days
Total Receivable: 1240
Net Payable: 15035
In our company, we calculate leave encashment on Earning A also deduction for notice period on the same thing. Remember one thing in mind. If the appointment letter states one month notice and you have served only say 26 days then the balance 4 days would be your shortfall, and it would be calculated like earnings A / 30 * 4 (number of days you have served your notice). Leave encashment is also calculated on the same basis. Earnings A / 30 * 25 (number of days leave balance).
Hope it is clear to you.
Regards,
AS
From India, Mumbai
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Providing you an example:
Name of the staff: ABC
DOJ
Basic: 5000
H.R.A: 2500
Conveyance: 800
Special Allowance: 1000
Earnings (A): 9300
Medical: 0
LTA: 0
Earnings (B): 0
P.F: 600
P.T: 175
Total Deductions: 775
Net Payable: 8525
Date of resignation: 05/05/2007
Last Working Day: 31/05/2007
Salary pending: 8525
Leave Encashment: 7750 25 Days
Total Payable: 16275
Absence of Notice period: 1240 4 Days
Total Receivable: 1240
Net Payable: 15035
In our company, we calculate leave encashment on Earning A also deduction for notice period on the same thing. Remember one thing in mind. If the appointment letter states one month notice and you have served only say 26 days then the balance 4 days would be your shortfall, and it would be calculated like earnings A / 30 * 4 (number of days you have served your notice). Leave encashment is also calculated on the same basis. Earnings A / 30 * 25 (number of days leave balance).
Hope it is clear to you.
Regards,
AS
From India, Mumbai
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Please note that the notice period for resignation could be adjusted against accumulated PL/EL. If it covers the notice period dates, there is no question of deducting salary in lieu of insufficient notice period. If not, deductions for the days of short notice period should be made from the GROSS salary, not the basic salary.
Suvajit
From India, Delhi
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Suvajit
From India, Delhi
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Dear Kavita,
To calculate the loss of pay, you need to know the notice period he or she is required to serve. For example, if an employee is supposed to serve a 30-day notice and has served 7 days from the date of his resignation, the calculation would be as follows: If the basic pay is Rs. 8600, then the calculation will be as follows: Basic pay multiplied by (Notice period deduction / 30). Notice period deduction is calculated as the number of days required to serve minus the days actually served. In this case, it will be 30 - 7 = 23, hence the Loss of Pay (LOP) will be 8600 * 23 / 30 = 6593.
Assuming LOP is calculated based on the basic salary, note that some companies calculate it based on the Gross pay. I hope I have clarified your doubts. Please feel free to contact me if you have any queries.
Regards, Kavita
From India, Mumbai
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To calculate the loss of pay, you need to know the notice period he or she is required to serve. For example, if an employee is supposed to serve a 30-day notice and has served 7 days from the date of his resignation, the calculation would be as follows: If the basic pay is Rs. 8600, then the calculation will be as follows: Basic pay multiplied by (Notice period deduction / 30). Notice period deduction is calculated as the number of days required to serve minus the days actually served. In this case, it will be 30 - 7 = 23, hence the Loss of Pay (LOP) will be 8600 * 23 / 30 = 6593.
Assuming LOP is calculated based on the basic salary, note that some companies calculate it based on the Gross pay. I hope I have clarified your doubts. Please feel free to contact me if you have any queries.
Regards, Kavita
From India, Mumbai
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To add on to this, as I mentioned in another topic, in my offer letter they have mentioned a notice period of 30 days, but they haven't mentioned the consequences which the employee would face if he doesn't serve the notice period. Now, my employer wants to deduct an amount from my salary as a shortage of notice period. Can I fight back or should I just take the final settlement and walk out of the company? What should I do in this case?
From India, Bangalore
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From India, Bangalore
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(Fact Checked)-The notice period deduction from salary should align with employment contract terms. Seek HR guidance or legal advice for resolution. (1 Acknowledge point)
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(Fact Checked)-The user reply contains correct information regarding the calculation of loss of pay when an employee has not served their full notice period. (1 Acknowledge point)