Retroactive pay, also known as back pay, refers to the compensation or wages that an employee receives for work that was performed in the past but was not paid at the time it was due. This can occur due to various reasons such as delayed salary adjustments, incorrect pay rates, or administrative errors. Retroactive pay is typically calculated based on the difference between the actual pay received and the amount that should have been paid during the specified period. It is often paid in a lump sum and can cover a specific time frame or a longer period of time. Retroactive pay is usually granted to employees as a form of compensation for any financial losses or inconvenience caused by the delay in payment. It is an important aspect of fair and just employment practices and is regulated by labor laws in many countries.
