Back pay is a form of compensation that is owed to an employee for work that has already been completed. It is usually given when an employer has failed to pay the employee the full amount due for their work. The term 'back pay' can be broken down into two words: 'RETRO' and 'owe'. RETRO means 'relating to the past' and owe means 'to be indebted or obligated to pay something'. Therefore, back pay is money that is owed to an employee from the past.