What is the meaning of retroactive pay?
Quote from accountinglads on June 2, 2025, 12:57 pmRetroactive pay is meant for the times when an employee did not receive their proper compensation. Many times, this is triggered by mistakes in administration, low salaries paid after the deadline or retroactive approval of new union agreements. In this way, retroactive pay will pay a wage increase for any period when it was not given on schedule. Companies can make sure they give their employees all the pay they are contractually obligated to receive, protecting fairness in work and salary. This may be paid in one lump sum or employers can change future payments.
Retroactive pay is meant for the times when an employee did not receive their proper compensation. Many times, this is triggered by mistakes in administration, low salaries paid after the deadline or retroactive approval of new union agreements. In this way, retroactive pay will pay a wage increase for any period when it was not given on schedule. Companies can make sure they give their employees all the pay they are contractually obligated to receive, protecting fairness in work and salary. This may be paid in one lump sum or employers can change future payments.