Net Pay Adjustments

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Net Pay Adjustments

Use the Net Pay Adjustment Transaction Code to pay employee/s more than once in a period.  The first payment is normally the Net Pay amount for the period, the second payment is a revised Net Pay amount taking into account an adjustment.  The second payment ignores Transactions that have already been paid. The advantage of this is that the additional transaction, related tax and Net Pay amounts are included with transactions already paid giving a complete picture of all the transactions for the period.
 

This most often happens when salaries have been paid but it is now necessary to make a further payment to employee's e.g. overtime, allowance or bonus.   It could also happen if staff have been paid but now tax parameters are updated that affect the Net Paid amounts that have been paid to staff.

 

Method

•The payroll is run as normal and staff paid

•A requirement to process adjustments is necessary

•Since the employees have already received their Net Pay we process a transaction, a 'Net Pay Adjustment', to bring the amount due to employees to zero

•The payslip is then in balance leaving a net NIL balance to be paid

•The additional earning/s, and/ or deductions are processed

•The Calculation Routine is run

•A new Net Paid amount is calculated which takes into account the new transactions only and the difference in PAYE that the transactions made.

•The new Net Paid amounts are paid to staff.

Advantage
One of the advantages of using this method is that it shows all the transactions that have been processed for the period showing both Net Pay amounts on one payslip.

tog_minus        Net Pay Adjustment Procedure for Single Currency Payrolls

To process a Net Pay Adjustment:

 

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•Create/ check that the Net Pay Adjustment Transaction Code has been created.  The default Transaction Code number is 975.

•Go to the 'Utilities', then 'Netpay Adjustments' menu options

 

NetPayAdjustmentUtilities

•A backup reminder encourages you to take a backup.  A backup enables you to go back to the point that the payroll was in before processing the Net Paid Adjustment.

•The 'Net Pay Adjustment' code is automatically selected for you.

•If you do not see it displayed in the 'Transaction Code' field then you did not create the Net Pay adjustment code correctly

•Click 'Process'

•A Range Selection screen displays.

•Press 'OK' to select all or make the necessary selections

•A list will display the employees with their appropriate Net Pay Adjustment amounts.  These are the Net Paid amounts that were paid out to employees in the first pay run and should not form part of any further payment made.`

 

NetPayAdjustmentList

•Check through the amounts of Net Pay that have already been paid to individual employees

•If satisfied, click 'Update'

•The update will go through.

•When complete a message 'Netpay Adjustment Completed' will be displayed

 

NetPayAdjustmentSuccess

•Click 'Ok'

 

Going to the Payslip Input for an employee it is possible to see the 'Net Pay Adjustment' come through:

 

NetPayAdjustmentResult

 

•Then process the additional transaction/s e.g. Overtime Payment

•Run the Calculate Tax Routine and see the new 'Net Paid' amount relates only to Overtime.  

•Notice that the PAYE and Tax Levy amounts have changed to take into account the new earning:

 

NetPayAdjustmentResult2

 

Note: Repeat the above steps for each payroll.

tog_minus        Net Pay Adjustment Procedure for Multicurrency Payrolls

To process the net pay adjustment in a multi-currency payroll, two transaction codes must be created: one in USD and one in ZWG. Once these codes are set, the net pay adjustments can be processed per employee or using bulk processing methods.

Step 1: Creating the Netpay Adjustment Transaction Codes

 

- Go to to the Edit', then 'Transaction Codes' menu options

- Click 'Insert'

- Select the 'Deduction-Amount' transaction category

NetPayAdjustmentCodeMulticurrency

- Accept/ Change the default 'Code'.

- Enter an appropriate 'Description' that clearly identifies the currency (e.g., "Net Pay Adjustment USD").

- Click Ok to save the new Transaction Code.

- Repeat these steps to create the Transaction Code for the second currency (ZWG).

NetPayAdjustmentCodeZWG

 

Step 2: Processing Net Pay Adjustments

There are multiple ways to process the Net Pay Adjustments, such as through payslip input, speed input, or Excel imports.

tog_minus        Net Pay Adjustments - Bonus Payment in Current Payroll Period

Bonuses can be paid in bonus periods created for the purpose. The advantage of this is that the bonus, tax and Net Pay amounts are isolated from other transactions and present well on the payslip.
 
An alternative is to:
- pay the employee for the payroll transactions in the current period giving the employee a payslip displaying these transactions.
- then process a Net Pay Adjustment (see above)
- process the bonus amounts
- run the calculation routine
- print payslips.
 
Notice that the payslips show all the transactions for the period, what has already been paid and now what should now be paid, net of tax, on the bonus.