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, chose Enter pay.
2. Select the employee then click Start pay run.
3. Take note of the Gross and PAYG/PAYE values. Here's our example for a weekly pay which we've also multiplied by 4 to get values for a 4 week pay:
   
4. If necessary, multiply the values based on the number of weeks of back pay that is due.
5. Cancel the pay without saving, e.g. go to the Dashboard or any other page.

Work out what the employee was actually paid

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

1. From the Reports menu, choose Payroll summary & details. The Payroll reports page appears.
2. Use the From and To dates to specify the back pay period.
3. Click Summary report.
4. Take note of the Gross and PAYG/PAYE 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 earning

You can set up a new earning pay item called "back pay" to appear on the employee's pay.

1. From the Payroll menu, choose Employees.
2. Click the employee's name.
3. Click the Pay items - earnings & deductions tab.
4. In the Earnings section, click the Add Earning dropdown arrow then choose + Create new earning.
   
5. Set the earning up as follows:
   • Type = Standard earning
   • Name = Back Pay
   • Name for payslip = If you'd like a different, more personalised, name to show on the employee's payslip for this earning, e.g. Back Pay - Steven
   • Rate = Fixed amount
   • Amount $ = 0.00

   • Tax = Taxable

     If you're not sure whether you should select the Exclude CEC option, check with your accounting advisor or the IRD.
6. 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, chose Enter pay.
2. Select the applicable dates under Confirm dates.
3. Select the employee then click Start pay run.
4. Determine the PAYG/PAYE payable:
1. Take note of the PAYG/PAYE value shown in the employee's pay.
2. Add the back pay tax amount calculated in task 3 above to work out the total tax payable. You might need help from your accounting advisor or IRD to ensure the tax is correct.
5. Next to the Back Pay earning, enter the gross value of the back pay. In our example this is $100.
6. Click into the pink PAYG/PAYE field and change the value to the figure you determined at step 4. Here's our example with $100 entered against the Back Pay earning and $10 added to the PAYG value.
   
7. Complete the pay as normal.