What Is Retro Pay?


Quick Answer

Retro pay, also known as retroactive pay, is a wage paid to an employee for work done in the past that was paid at a different rate. Retro pay is not the same as back pay.

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What Is Retro Pay?
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Full Answer

During the process of wage disputes, an agreement may be reached regarding work that has already been completed and paid. If the newly agreed upon amount is higher than the amount that had already been paid to the employee, retroactive pay will cover the difference. For example, if work performed in February was paid at $10 per hour and negotiations are made in March that result in increased wages dating back to January to $12 per hour, the employee would be issued a payment for the additional $2 per hour. Back pay, on the other hand, is issued for previous work that had not been paid at all.

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