This help guide will detail the different methods you can use to process a missed or incorrect payment, such as creating a pay run or processing back payments.
Note: If you're unsure of the best option for your situation, you should always speak to your accountant first.
Creating a Pay Run
Payments to employees — including back pay and 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 calculate an employee's tax based on the earnings included in that pay run. They do not consider other payments included in other pay runs for the same pay period.
Back Payments
Back payments are taxed on the Schedule 5 Tax Table.
Lump Sum Payments
If your payment needs to be processed as a lump sum payment, ensure this 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 on 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
Earnings Rate Payments
If this payment needs to be processed as an earnings rate, ensure this has been configured 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 the 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 follow this method, add a negative line item for the amount that was incorrectly paid, along with a positive line item for the correct amount.
For example, this employee was incorrectly paid at a rate of $25 for 10 hours. They should have been paid at a rate of $27.50 for 10 hours. Reversing this payment would look like this:
The above example covers Earnings Rates. However, you can repeat the same process 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. In this case, earnings rates will need to be calculated manually.
Can I add this to an out-of-cycle pay run?
Can I add this to an out-of-cycle pay run?
Yes. Don't want to add the employee to an in-cycle pay run? Check our out-of-cycle help article.
I can't see the employee I'm trying to back pay. How do I add them?
I can't see the employee I'm trying to back pay. How do I add them?
This employee may be deactivated. You can check this by navigating to Staff > Tools > Deactivated Staff. Once they have been re-activated, you will be able to add them to pay runs that have been configured to their entity and pay group. If these are correct and you still can't see the employee, reach out to payrollsupport@tanda.co