This article covers different methods of processing a missed or incorrect payment. If you're unsure on the best option for your situation, speak to your accountant as to the best option.
Creating a pay run
Payments to employees, including back pays or other missed or incorrect payments can be processed via a normal in-cycle pay run, or an out-of-cycle pay run.
Out-of-cycle pay runs will calculate an employee's tax based on the earnings included in that pay run, and will not consider other payments included in other pay runs for the same pay period.
Back payments
A back payment will be taxed on the Schedule 5 Tax Table.
If your payment should be processed as a lump sum payment, ensure one has been configured in your Lump Sum Types.
To add a back payment as a lump sum:
Find the relevant employee in your pay run and click their name
Click + ADD on the Lump Sum Payments section
Select the relevant Lump Sum Type that you've configured in your settings
Complete all other relevant fields
If this should be processed as an earnings rate, ensure one has been set up in your Earnings Rate Settings.
To add a back payment as an earnings rate:
Find the relevant employee in your pay run and click their name
Click + ADD next to Back Payments section
Select the relevant Earnings Rate that you've configured in your settings
Complete all other relevant fields
Reversing a normal gross wages payment (not via a Back Payment)
Reversing a normal gross wages payment will be taxed using the normal earnings tax table.
If your accountant has advised you to use this method, add a negative line item for the amount that was incorrectly paid, along with a positive line item for the correct amount.
As an example, this employee was incorrectly paid at a $25 rate for 10hrs and should have been paid at $27.50 for 10hrs. This reversal would look like this:
This example is used for Earnings Rates, however, the same process can be used for other line items like Leave.
FAQs
Can I add a comment on the payslip?
Can I add a comment on the payslip?
Yes - you can add a comment in the Notes section of the payslip to explain the reason for this pay run. To continue the example above, we could add something like:
Can I allocate these in bulk?
Can I allocate these in bulk?
Lump Sum payments can be allocated in bulk through the "Payslip Lump Sum Lines" option in your Import/ Export settings. Earnings rates will need to be done manually.