How do I record back pay in MYOB Payroll?
Back pay can be tricky to calculate. An employee points out (or maybe you realise yourself) that the award rate increased several weeks or even months ago. You’ve got to look up how many hours each employee worked between then and now and figure out how much each employee was shortpaid. Here’s how it goes:
Generate a report showing total hours worked at the wrong rate.
To see how many hours you paid each employee at the wrong rate, go to your Reports menu, click the Payroll tab and double-click the Employees Register [Detail] report. Select your date range carefully (if some of the back pay period relates to the last payroll year, you’ll need to restore your end-of-year payroll also). This report shows the total number of hours worked for each pay category for each employee.
Send the report to Excel and make your calculations.
You’re best to view this report as a spreadsheet: display the report, click the Send To button, followed by Excel. Using a spreadsheet means you can set up formulae to calculate the back pay automatically and better still, you’ve got an accurate and formal record of your back pay calculations.
Set up a new wages category for back pay.
Go to Payroll Categories and click the Wages tab. Click New to create a new wages category, call this category Back Pay, and as the Type of Wages choose Hourly. You can either leave the Pay Rate as it is (Regular Rate Multipled by 1.00) or you can enter it as a Fixed Hourly Rate of however much the pay was short per hour. Click Employee and mark off every employee who is eligible for back pay.
Process pays for each employee.
Go to Process Payroll. When you arrive at the Select & Edit Employee’s Pay window, zoom in on each employee’s pay and record the back pay. Make sure that the back pay doesn’t affect the number of hours that accrue for leave entitlements, and manually adjust the PAYG tax and superannuation as necessary. For details on how to calculate the right amount of tax, refer to the ATO document How to withhold from back payments.
The contents from this page are taken from the MYOB Payroll eBook series, by Veechi Curtis, available online for only $9.95 each.
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