What Is the Meaning Of LOP Reversal & Its Importance

Duration: 5-6 minutes 

LOP Reversal is salary reimbursed after deduction to employees. It generally happens when an employee has exhausted all their leave balance and still avails more leaves; those leaves are considered as loss of pay.

It can also be due to technical glitches or even due to a fine imposed on the employee. As loss of pay reversal, the employer is compensated by the employee in terms of extra leaves.

In the case of loss of pay, an example would be if an employee earns ?60,000 per month and avails 3 leaves over the balance, the salary paid to the employee would be ?54,000. This is nothing but the loss of pay. Then after careful consideration, loss of pay has been reversed by employers, which can be termed as LOP reversal.

Causes of LOP

But before understanding LOP reversal, let''s understand a number of reasons for loss of pay. There is not only one single reason responsible for this. A few of the reasons are:

• Unapproved Leaves: Unauthorized leaves can result in termination of employment. But, the more urgent repercussion is loss of pay.
• Sickness: When an employee has exhausted his/her leave credits because of an injury, illness, or an accident, he/she can take additional leave.
• Other: Some other reasons that an employee may lose pay include an emergency with his/her family, unforeseen trips to the doctor, or other reasons that deal with personal issues.

But sometimes LOP occurs due to mismanagement on the employer''s side. Let''s discuss:

Causes of LOP Reversal

• Glitches in Technical System: At times, technical glitches like attendance issues may create ruckus which lead to LOP. These glitches must be addressed manually.
• Mismatched Approval Cycles: Inconsistencies or delays in the approval process of leaves or time off work may ultimately result in LOP.
• Irregular Data of Attendance System: Irregular data here means inaccuracies in the attendance system of the company. This usually leads to LOP due to mistaken absence in the workplace.
• Manual Calculation of Payroll: When salaries are paid by manual calculation, there is a great chance of error in payroll calculations.

Consequences of LOP Reversal

The consequences of LOP Reversal may vary depending on the situation. However, the most prominent ones are:

• Monetary Adjustments: LOP Reversal primarily includes adjustments to the employee''s salaries to pay the employee what he/she is owed.
• Employee Satisfaction: Employees are more satisfied knowing that they receive their rightful compensation. This in turn boosts employee morale.
• Legal Complications: LOP Reversal mismanagement or refusal may lead to litigation from the side of the employee.
• Administrative Burden: The LOP Reversal increases the burden on administration in the form of detailed documentation.

How to Avoid LOP Reversal

• Leave Approval in Advance: The employees should get their leave approved in advance so that the management is able to find a replacement or make arrangements for the days of absence.
• Compensation of Time: Employees can compensate for their time off by working extra hours or by working on weekends. This might avoid the loss of pay of an employee by the end of the month.
• Avoid Unnecessary Leaves: The employees must manage their leaves. You must opt for leaves only in dire need. This may help avoid the situation.

Key Takeaways

LOP Reversal refers to salary reimbursed after deduction to employees. This generally occurs when an employee has exhausted all of his/her leave balance and still avails more leaves; those leaves are considered loss of pay.

The main factors that might cause LOP include unapproved leaves, illness, injury, or accidents. LOP reversal may lead to adjustments in monetary terms, additional administration work, and litigation.

Leave Without Pay could be avoided through leave approval in advance, by compensating time through extra hours of work, and by not taking unnecessary leaves.

Frequently Asked Questions