This article outlines your possible options for when an employee has been underpaid 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 pay your employee before the next pay run
  • Underpayment in the current financial year
  • Underpayment in a previous financial year
• Adding the back payment to the employee in the next pay run
  • Underpayment in the current financial year
  • Underpayment in a previous financial year

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

If the underpayment 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 processed - that is, if the ABA file has not been uploaded and STP has not been submitted - you can fix the underpayment 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 is to either

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

Important Note: 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 action to take in the circumstances. You may find these two pages helpful:
ATO - Reporting back-payments
Fair Work Ombudsman - I think I've underpaid my employee

Running an ad hoc pay run to pay your employee before the next pay run

Underpayment is related to the current financial year:

Prepare an ad-hoc pay run for the employee/s that you want to back pay.

Amend the payslips to add the payments that make up the back-payment for the ad hoc pay run.

In this example, we are back paying the employee a tool allowance that they were not paid for the past 12 months totalling $2,912.

Underpayment is related to a prior financial year/s:

Prepare an ad-hoc pay run for the employee/s that you want to back pay.

Amend the payslips to add the payments that make up the back-payment for the ad hoc pay run.

In this example, we are back paying the employee a tool allowance that they were not paid for the past 100 weeks, totalling $5,600. 

If you want to report amounts related to previous financial years as Lump Sum E payments, you will need to include in the title of the payment, "@" and the year that the back payment relates to i.e. Tool Allowance - Kitchen @2024 to report the year the back payment relates to.

Select the STP type as Lump_E. This will report the payment as Lump Sum E in the STP report. 

For amounts related to a previous financial year that are NOT to be treated as Lump Sum E, follow the same process as Underpayment related to the current financial year above.

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.

Amend the payslips of the affected employees to add the payments that make up the back-payments. 

In the example, we are back paying the employee a tool allowance that they were not paid for the past 12 months totaling $2,912.

Underpayment related to a prior financial year/s:

Prepare the regular pay run as normal.

Amend the payslips of the affected employees to add the payments that make up the back-payments. 

In the example, we are back paying the employee a tool allowance that they were not paid for the past 100 weeks totaling $5,600.

If you want to report amounts related to previous financial years as Lump Sum E payments, you will need to include in the title of the payment, "@" and the year that the back payment relates to i.e. Tool Allowance - Kitchen @2024 to report the year the back payment relates to.

Select the STP type as Lump_E. This will report the payment as Lump Sum E in the STP report. 

For amount related to a previous financial year that are NOT to be treated as Lump Sum E, follow the same process as Underpayment related to the current financial year (see above).

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.