What Does Retro Pay Mean?

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Retro pay are wages due to an employee for work already performed or services already rendered, usually in association with a pay raise that requires some sort of payroll action before taking effect.

When in association with a raise, retro pay is usually calculated from the date of the raise to the effective date. Companies usually distribute retro pay in a single lump sum, though some distribute retro pay over a series of several pay periods. Similarly, back pay is pay that is owed for past work or services rendered as the result of some sort of payroll or bookkeeping error.