# How to create an adjustment pay run

KB97

### Overview

Sometimes a Pay run is created, applied and paid through payroll, and then you find out it is incorrect. This is a very common occurrence with things like leave, superannuation and overtime. The action you take will depend on the extent of the issue and whether or not you have actually processed payments to staff.

### Process

#### OPTION 1: Un-apply and fix the pay run if possible – but follow the rules!

You can un-apply, Edit, fix and Re-Apply the pay run. We would not recommend you do this if:

- Another pay run for this person has since been created
- The funds have been taken out of the bank
- Pay slips have been issued

Of course, this can be done at your discretion. If the funds have been taken out of the bank, but you know that the change will not affect net pay, it may be a good option to un-apply the pay run, correct it and then re-apply and re-create your automated remittance.

#### OPTION 2: Create an adjustment pay run

If you are not able to use Option 1, the only option left is to create a new pay run, which adjusts the values that were incorrect in the last pay run. The goal is to ensure that the two pay runs added together will yield the overall results. Here is the basic procedure:

1. Create a new pay run
   1. Ensure the Pay Run date is the date to which you want to post the adjustments. Remember that, if this pay run ends up paying the employee more money, you should not back date it – it still needs to be dated on the date that you pay them the money
   2. Add the person whose pay you are correcting. If they have been terminated already, you can use filters on the employee selection list to show terminated employees as well
2. Double click on the employee to go into their pay run detail
   1. Make the Pay From and Pay To dates the same as the incorrect pay period for record keeping purposes. This will also ensure that the next pay run that is done for this employee won’t think that they have already been paid for the next pay run
   2. Remove all pay items so that you can start afresh
   3. Add adjustment pay items to counteract the things that were wrong on the last pay run. For example, if the last pay had too few hours of overtime, add an overtime pay item. See the discussion below about how to adjust different items
   4. Manually adjust the TAX or superannuation values as appropriate. You can use the EXTRATAX pay item with a plus or minus to adjust the tax
   5. Ensure that the net pay, allowances, deductions AND superannuation have the values you need to adjust the last pay run that was incorrect
   6. Add plenty of notes in the Pay advice memo or internal memo to explain fully what was done and why. This will be crucial when you go back and look at it or you are queried by the employee. Include intermediate calculations if you need to
3. Update the pay run and apply it. Pay any money that needs to be paid as you would normally
4. Attach any documents as supporting evidence for this change: e.g. an email from the employee stating that their pay was wrong, a spreadsheet used to calculate. You will thank yourself for doing this when someone questions it

Important points to note when creating an adjustment pay run

- Accentis Enterprise will not take into account any other pay runs when calculating PAYG tax. You must ensure that the tax rate is correct for this pay run with respect to the pay run you are fixing
  - For example: if you forgot to pay someone one hour’s worth of pay, and you create an adjustment pay run for one hour, it is likely there will be no tax calculated on this because, by itself, this is under the tax free threshold. You must ensure that the tax is adjusted according to the tax that would have been paid if the original pay run had the correct values. You can use the EXTRATAX pay item to adjust tax up or down
- Some pay items are not able to have their quantity modified so you must use alternate pay items
  - For example, the ORD pay item is typically setup up as “Normal Hours Remaining” and can’t have its quantity modified. If you need to make an adjustment to someone’s ordinary pay because, for example, they had a sick day instead of ORD, then you can use ORD (adjustable) to add a negative ordinary pay, then add your sick pay item. This will usually result in a net pay of $0, but it will have correctly deducted sick leave
- If you need adjust items so that they appear in a different payment summary position, you can create pay items specifically to adjust payment summary position items. This is so that the net pay has not changed but values have been deducted and added to different payment summary positions

### Did you find this article helpful?

If this article is missing information, ambiguous, or didn’t give you clear instructions, let us know and we will make it better! Please email us and quote the KB# in the top left of this article to let us know why it didn’t help you out and we will point you in the direction of additional information.

Last edit 17/01/20