This article outlines your possible options for when an employee has been overpaid in Deputy Payroll, and will cover:

• Whether to fix the discrepancy on the timesheet or on the payslip
• Fixing a pay run that has not been processed
• Fixing a pay run that has been processed
• Running an ad hoc pay run to recoup the overpayment before the next pay run
  • Overpayment in the current financial year
  • Overpayment in a previous financial year
• Recouping the overpayment from the employee in the next pay run

Should I fix the overpayment on the timesheet or on the payslip?

If the overpayment stems from an error on the timesheet - such as incorrect hours or a missing timesheet - it's best to fix the error in the Timesheets tab, which will

• ensure timesheets are accurate for records and reporting purposes
• automatically update the pay details on the payslip (after you reprocess the payslip)
• minimise discrepancies between the timesheet and the payslip.

For pay items that do not come from a timesheet, you can fix these errors during the payslip review.

Has the payment been processed?

If NO

If the payment has not been committed - that is, if the ABA file has not been uploaded and STP has not been submitted - you can fix the overpayment within the pay run. 

Note: You should take into consideration when you have completed and locked the pay run that employees have been given access to payslips, even if the ABA file and STP has not been done. When you unlock and amend a pay run, employees will have access to the amended pay slip once you recomplete and relock the pay run. 

If YES

If the ABA file has been uploaded, and/or the STP file sent to the ATO, your best practice action (after following FWO and ATO guidelines) is to either

• complete an ad-hoc pay run before the next scheduled pay run, OR
• adjust the overpayment in the next scheduled pay run

Important Note: It is important that you first establish that an adjustment to the pay-run or recouping the overpaid amount is legally permissible in the circumstances. Deputy does not provide advice on employment law or taxation matters, including payroll specifics. Please seek professional advice from your legal/employment relations adviser if you are unsure which option to take. You may find these two pages helpful:
ATO - Repayment of overpaid amounts
Fair Work Ombudsman - Overpayments

Running an ad hoc pay run to recoup the overpayment before the next pay run

Overpayment related to the current financial year

Prepare an ad-hoc pay run for the employee/s that you need to make an amendment for.

Amend the payslips to add the reversal payments (as a negative amount) that make up the overpayment for the ad hoc pay run.

In this example, we're adjusting 2 weeks (76 hours) of ordinary pay we discovered the employee was overpaid while they were on leave without pay. The employee has reimbursed the business directly.

If you need to change the tax calculated - for example, you have applied a different method to a marginal tax calculation - it is possible to do that directly in the payslip by clicking the pencil button to the far right of the Tax line. Enter the correct tax amount, and click the save icon.

Overpayment related to a prior financial year/s

Prepare an ad-hoc pay run for the employee/s for whom you want to amend their Income Statement. Complete the fields for the New Payrun to meet the individual requirements of each overpayment.

Add the reversal payments that make up the overpayment for the ad hoc pay run by choosing the pay category (title) you need, completing the other fields as needed and entering the amount as negative.

In this example, we're adjusting 2 weeks (76 hours) of ordinary pay we discovered the employee was overpaid while they were on leave without pay. The employee has reimbursed the business directly.

If you need to change the tax calculated - for example, you have applied a different method to a marginal tax calculation - it is possible to do that directly in the payslip by clicking the pencil button to the far right of the Tax line. Enter the correct tax amount, and click the save icon.

Complete the ad-hoc pay run as normal. 

Adding the back payment to your employee in the next pay run

Underpayment related to the current financial year

Prepare the regular pay run as normal.

Add the reversal payments that make up the overpayment for the ad hoc pay run by choosing the pay category (title) you need, completing the other fields as needed and entering the amount as negative.

In the example, we're adjusting 2 weeks (76 hours) of ordinary pay we discovered the employee was overpaid while they were on leave without pay. The employee has reimbursed the business directly.

If you need to change the tax calculated, for example, you have applied a different method to a marginal tax calculation, it is possible to do that directly in the payslip using the pencil button on the far right-hand side to edit.

Complete the regular pay run as normal.

Important Note: Deputy does not provide advice on employment law or taxation matters, including payroll specifics. Please seek professional advice from your legal/tax adviser before seeking to recover any overpayment and/or if you are unsure what to select in these fields. 

It is your responsibility to ensure that you are correctly classifying and reporting payment types through Single Touch Payroll. It is also your responsibility as an employer to ensure that you are paying your employees correctly in line with applicable legislation, award/s and industrial instrument/s and so it is important that you carefully review (and if necessary, make any adjustments to) the payslips generated for each of your team members before "completing" the pay run.