Back pay

Work out what the employee should have been paid

The easiest way to work this out is to review a sample pay for the employee using their updated wage details.

1. From the Payroll menu, choose Create pay run.
2. Select the employee's Pay cycle and click Next.
3. Take note of the Gross and PAYG values for the employee.
4. If necessary, multiply the values based on the amount of back pay that's due.
5. Exit the pay run, e.g. go to the Dashboard or any other page.

Work out what the employee was actually paid

Run the Payroll activity report to see what the employee was actually paid for the back pay period.

1. From the Reports menu, choose Standard.
2. Click to open the Payroll activity report.
3. <can't replicate this bit - or what happens next>Use the From and To dates to specify the back pay period.
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6. Take note of the Gross and PAYG values for the back pay period.

Calculate the back pay

To calculate the back pay, subtract what the employee was actually paid from what they should have been paid.

This example shows the employee should have been paid $1500 in gross pay but was actually paid $1400. This means they are owed $100 in back pay. This can also help to work out if additional tax needs to be withheld. In our example, $10 of tax needs to be withheld from the back pay.

Set up a new wage pay item

To include the back pay on the employee's next pay, set up a Back Pay wage pay item. This pay item should already exist in MYOB, but you can set it up from scratch if needed.

1. From the Payroll menu, choose Employees.
2. Click the employee's name.
3. Click the Payroll details tab.
4. Click the Salary and wages tab.
5. Under Allocated wage pay items, click the dropdown arrow and choose Back Pay. If it isn't listed, click Create wage pay item.
6. Set up the pay item:
   1. Enter a Name, such as "Back Pay" or similar.
   2. Choose the applicable ATO reporting category. If unsure, check with your accounting advisor or the ATO. Learn more about assigning ATO reporting categories for Single Touch Payroll.
   3. Under Allocated employees, choose any additional employees who are entitled to back pay. By default, the pay item will be assigned to the employee
   4. Under Exemptions, choose any deductions or taxes that shouldn't be calculated on back pay. If unsure, check with your accounting advisor or the ATO.
7. Click Save.

You can now pay the back pay as shown below.

Pay the back pay

The simplest way to pay the back pay is to include it in the employee's next pay.

Here's how:

1. From the Payroll menu, choose Create pay run.
2. Select the employee's Pay cycle and click Next.
3. Determine the PAYG payable:
1. Take note of the PAYG value shown in the employee's pay.
2. Add the back pay tax amount calculated in task 3 above to work out the total PAYG payable. You might need help from your accounting advisor or ATO to ensure the tax is correct.
4. Click the arrow to open the employee's pay.
5. Enter the gross value of the back pay against the Back Pay pay item. In our example this is $100.
6. Change the PAYG value to the figure you determined at step 3. Here's our example with $100 entered against the Back Pay pay item and $10 added to the PAYG value.
7. Complete the pay as normal. Need a refresher?

After paying the back pay

You can remove the Back Pay pay item from the employee. You'll be able to use the Back Pay pay item again later if needed.

1. Go to the Payroll menu and choose Employees.
2. Click to open the employee's record.
3. Click the Payroll details tab.
4. Click the Salary and wages tab.
5. Under Allocated wage pay items, click the delete icon to remove the Back Pay pay item.
6. Click Save.