Payroll Back Pay

SOLVED

Good day All,

I hope your well.

I need some assistance. I was informed that a decision has been made to give all staff a certain percent increase on salaries and that it should of been affective from March, although my Payroll has been processed, salaries paid etc. And i should do it as a back pay. So in April i am suppose to give everyone the increase double but it should not affect our tax grade. 

Can anyone assist with a way i can do this? Do i just add the increase on everyone salaries and let Payroll work out the tax, UIF and SDL or is there another way to do this as i do not want to let one of the employees fall under a higher tax grade/level?

Your response would be highly appreciated.

Kind regards

Nadia

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  • +1
    verified answer

    Good day LPD. 

    Thank you for your post. 

    We do not advise that you roll back to the period the increase was applicable from as you will then need to redo each period again after the roll back when you roll forward again and you will also need to restate your EMP201's for these periods. So we advise that you firstly calculate what the back pay amount should be so that you can add this amount on the current period payslip as back pay. And then for this current period on the hours and rates tab correct the hours and rates so that the increase is correctly reflecting and then save the hours and rates.

    You may need to link the required back pay definition to the template, and then add it to the Payslip. To add this, click on:

    - Company

    - Global Payslip Definitions

    - click on Payslip Definition Template tab.

    - Click on the + sign next to the earnings and add the required back pay definition

     

    Before you save please ensure that you have ticked the company/cycle on the far right hand side of the screen under the title "Linked to cycle".

     

    Adding it to the Payslip:

    • Navigate to Payroll,
    • Select the Employee in question
    • Select the payslips tab
    • Click on the plus sign next to the earnings
    • Select the back pay transaction required
    • Click on OK

    To increase an employee salary / wage please click on Payroll>Hours and Rates>Select applicable employee>scroll to the bottom>enter new increase next to fixed salary description. You will follow these steps in the pay period the increase is applicable from.

    Because the back pay definition is taxable it will be included in the taxable year to date calculation and the system will automatically calculate the correct PAYE, UIF and SDL for the current period. Any changes to the PAYE will be correct if the back pay and increase is correctly processed in the current period. 

    Please consult with your tax practitioner for further information regarding the tax implications. 

    You can view the detailed tax calculation by selecting "view tax calculation" on the employee payslip tab once the back pay and increase has been processed in the current period. 

    Kind regards

    Gerhard

  • 0 in reply to Shazi

    Thank you very much Gerhard, 

    I will try this and let you know if i am experiencing any problems.

    Regards,

    Nadia

  • 0 in reply to LPD

    It is only a pleasure Nadia. 

    Kind regards

    Gerhard

  • 0 in reply to Shazi

    Thank you Gerhard, 

    All seems to be in order.

    I have increased everyone salaries to the new amount and under 'Process Payslips' - 'Default', i have added code 5209 (Backpay  - own amount) and inserted the amount of increase everyone was suppose to receive last month. 

    I will let the tax practioner double check my work, but i believe all is fine. 

    Thank you once again. 

    Regards,

    Nadia

  • 0 in reply to LPD

    Thank you for the feedback Nadia. 

    It is only a pleasure. 

    Kind regards

    Gerhard

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