How Can I Correct A Pay If It Has Already Been Banked?

Correcting a pay that has already been banked depends on the type of issue: whether it’s an incorrect pay item, an underpayment, or an overpayment. Follow the appropriate steps below.

Incorrect Pay Item Used

If an employee was paid the wrong pay item or rate (e.g., annual leave instead of sick leave), but the value of the pay remains unchanged (gross, tax, net, super), you can update the existing pay:

1. Go to Pays > Navigate to the correct pay run.
2. Edit the incorrect pay by clicking the edit pencil button.
3. Update the pay item and save the changes.

Report this change to the ATO by sending an STP update event: Single Touch > Submit Payroll To ATO > Create update event. If an update event is unavailable, it may need to be submitted from the employee's latest pay run for the financial year. (Learn more)

Underpayments

If an employee was underpaid, record a new pay to correct the error. Leave the original pay unchanged for a clear audit trail.

Scenario 1: Correction for the Same Pay Run

This scenario applies if you have already completed the employee's current pay, meaning it has been saved, banked and/or reported to the ATO.

1. Go to Pays > Create Pay Wizard.
2. Ensure the processed date matches the banked date and untick Create Full Pay.
3. Edit the second pay line for the employee.

Example 1: Missed or unrecorded items

Add the missed items to the new pay and manually calculate the tax difference. Use the Tax Calculator in the Tools menu or temporarily edit (without saving) the original pay to determine the tax adjustment.

This example shows how the tax would be edited to record the difference of $18 tax required.

The Tax Calculator is found under Tools at the top of the program.

Example 2: Incorrect pay items

Enter a negative value for the incorrect pay item and a positive value for the correct one.

The employee was originally paid 38 hours ordinary time worked.

They should have been paid holiday/annual leave plus leave loading. Notice the correction where the OTE is cancelled via a negative entry alongside the corrected entry. The 38 hours OTE is cancelled out by the 38 hours leave, but the pay is increased by the leave loading amount which was the cause of the underpayment. Tax has been edited in this case to account for the required $24 which can be manually calculated using one of the two methods mentioned above.

Scenario 2: Correction for a Previous Pay Run

Follow the same steps as Scenario 1. Alternatively, make the corrections in the employee's current pay run or create a second pay line via the Create Pays Wizard.

Overpayments

Overpayments require careful handling. Refer to the Fair Work guidelines:

When overpayments occur, the employer and employee should discuss and agree on a repayment arrangement. A written agreement should include the reason, amount, repayment method, and schedule. If no agreement is reached, seek legal advice. (Learn more)

Deduct overpayments in upcoming pays by entering negative values for the overpaid item. For example, if 40 hours OTE were paid but only 30 hours were worked, deduct the 10 hours in the next pay. Ensure that no pay value (gross, tax, net, super) falls below $0. Arrange for deductions across multiple pays if necessary.

STP Reporting

Corrected overpayments or underpayments must be reported via Single Touch Payroll. Submit a new event (pay event) to correct both company totals (W1 & W2) and employee-level YTD totals. Note: Update events only adjust employee-level YTD amounts, and adjust events only modify company totals (W1 & W2).