How to explain corrections to employees

Summary

How to explain corrections to employees in Sage Payroll.

Description

If you make a correction to an employee's pay, their payslip may look different and prompt them to ask you about it. This article covers how to explain a payroll correction to them.

You'll need to explain the reason for the correction.

For example, a missed bonus payment or overtime, or wrong tax code used in the last pay run.

We recommend that you print the payslips for the affected employees first.

Use the previous and current payslips along with The P32 Employer Payment Record. Compare their pay before and after changes.

Resolution

Explain a correction

When you complete your pay run, we send an online submission to HMRC (Full Payment Submission or FPS). This happens every time you pay your employees. Once payroll submits the FPS, we can't change it. If you change a completed pay run, payroll reports the changes on the next submission.

Changes may show on the employee payslip as a correction and will affect employee pay.

You can reverse any corrections in the current pay run so it doesn't affect employee pay if needed.

NOTE: You can’t remove the correction on the payslip. The corresponding correction reversal is also on the payslip.

Deductions examples:

Scenario 1 - You deducted pay and paid the employee the correct amount in that pay period >

You compare the payslips from before and after the correction.

You see sickness added to Sam's absence record in Month 3. This change occurred after the completed pay run but before pay day. The FPS has submitted to HMRC. You paid the correct pay and Sam received an updated payslip.

In Month 4, the correction shows for the missing absence in Month 3. Sam received the correct amount in month 3. You added a negative deduction to reverse this. This deduction reversal appears on Sam's payslip for Month 4.

Scenario 2 - You deducted pay in one period and corrected it in the following pay period >

Your employee Charlie notices a deduction on their payslip they were not expecting.

You see sickness added to Charlies absence record in Month 3. This was after the pay run was complete. The FPS submitted and you paid Charlie.

In Month 4, a correction appears on the payslip.

You paid Charlie too much in Month 3, so the deduction in Month 4 is to take back the overpayment. A reversal is not needed.

Payments examples:

Scenario 3 - You increased pay and paid the employee the correct amount in that pay period >

Alex notices an extra payment showing on their payslip that they weren't expecting.

You compare payslips before and after the correction. You work out that a payment for overtime missing from Alex's pay in Month 1. You noticed the omission after the pay run was complete. The FPS submitted to HMRC, but employees not yet paid. Alex received the correct amount and sent an updated payslip.

As Alex received the overtime in Month 1, it's included in the pay for Month 2, for reporting to HMRC. It needs reversing so it doesn't affect the current pay run

Scenario 4 - Pay was increased and the employee pay was amended in the following pay period >

Jordan notices an extra payment on the payslip that he wasn't expecting.

You work out that you missed a payment for overtime from Jordan's pay for Month 1. You noticed the omission after completing the pay run. The FPS submitted to HMRC, and the employees paid.

Jordan had no overtime paid in Month 1. It's included in the pay for Month 2. It doesn't get reversed.

Resources for employees

Here's a handy guide you can give to your employees to help them understand a correction Understanding corrections on your payslip (opens in a new window).