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Australia (AU)TeamCorrecting Pay Runs

Correcting completed pay runs

Use this guide when a pay run has already been marked as paid and lodged through Single Touch Payroll (STP).

Before you start

A completed pay run is locked to preserve its journals, payment history, leave deductions and audit trail. Do not try to reopen, edit or lodge the completed run again.

First establish exactly what was wrong:

  1. Compare the approved timesheet and leave requests with the completed pay item.
  2. Identify the incorrect hours, rate and payment component.
  3. Calculate the effect on gross pay, PAYG withholding, net pay and super.
  4. Check whether leave hours were deducted from the employee’s balance.
  5. Confirm whether the employer will recover the net overpayment or waive recovery.

Keep written evidence of the correction and any repayment arrangement. Check the applicable award, agreement and Fair Work requirements before deducting an overpayment from a future wage.

Money, leave and STP are separate

A completed-pay correction can affect three records:

  • Money and payroll: gross pay, PAYG, net pay, super and accounting.
  • Leave: the employee’s available balance and leave taken.
  • STP: the year-to-date amount and its payment classification.

Correct each affected record. A leave-balance adjustment does not recover money or change STP. An STP Update does not pay or recover money, change leave, create journals or remit super.

Ordinary-hours overpayment

Use this procedure when an hourly employee was paid too many ordinary hours and no leave component was involved.

  1. Do not use an unscheduled pay run to recover the overpayment.
  2. Agree the recovery with the employee.
  3. On the employee’s next scheduled pay run, reduce ordinary hours by the number previously overpaid.
  4. Review the recalculated gross, PAYG, net pay and super before approving the run.
  5. Mark the run as paid and lodge STP normally.

The next Submit reduces the employee’s STP Gross YTD. A separate STP Update is normally unnecessary because the original and correcting amounts are both ordinary gross.

Gross pay cannot be negative. Split a large recovery across scheduled pay runs if required.

Personal or sick leave recorded twice

Use this procedure only after confirming that one personal-leave entry was duplicated and the employee did not take those additional hours.

  1. Open Team → Leave → Balances and restore the duplicated hours to the employee’s Personal/Sick Leave balance. Enter a clear audit reason.
  2. Agree recovery of the net overpayment with the employee.
  3. On the next scheduled pay run, reduce ordinary hours by the duplicated paid-leave hours.
  4. Review the recalculated PAYG, net pay and super, then lodge the pay run normally.
  5. After the Submit succeeds, open Team → STP, find the employee in the current financial year and select Adjust YTD.
  6. Increase the displayed Gross YTD by the duplicated leave pay and decrease Paid Leave – Other (O) YTD by the same amount.
  7. Enter a reason and lodge the STP Update.

The Submit recovers the overpayment but reduces ordinary Gross YTD. The subsequent no-payment Update moves the original duplicated amount out of Paid Leave and back into Gross so the STP classifications are also correct.

If the employer waives recovery, do not reduce the next pay. Restore the leave balance and lodge one STP Update that increases Gross YTD and decreases Paid Leave – Other (O) YTD by the duplicated leave pay. PAYG and super remain as originally paid.

Annual leave recorded twice

Annual leave may include leave loading, so do not treat it as a simple ordinary-hours correction.

  1. Open Team → Leave → Balances and restore the duplicated annual-leave hours. Enter a clear audit reason.
  2. Separate the duplicated amount into:
    • base annual-leave pay; and
    • leave loading.
  3. Calculate the gross, PAYG, net-pay and super effects. Leave taken is generally included in ordinary time earnings; leave loading is treated separately and may not attract super.
  4. Agree recovery of the net overpayment with the employee.
  5. Contact your payroll adviser or Rebased Support before preparing the correcting pay item. Reducing ordinary hours alone does not reverse the leave-loading component correctly.
  6. Review the prepared correction before approving and lodging the next scheduled pay run.
  7. After lodgement, review the employee’s STP YTD. If the recovery changed ordinary Gross but left the duplicated amount in Paid Leave – Other (O), use Team → STP → Adjust YTD to correct the classification.

Do not enter leave loading as an arbitrary negative allowance merely to make the net amount agree. The payroll components, super treatment, journals and STP classifications must all remain aligned.

Using Adjust YTD

Use Team → STP → Adjust YTD only for a no-payment correction.

The single-employee form displays current YTD totals and asks for the corrected totals. Rebased calculates the deltas. Do not enter a delta as though it were the corrected total.

An STP Update:

  • changes the ATO’s payee YTD record;
  • does not recover money from an employee;
  • does not change PAYG or super accounting journals;
  • does not change a leave balance; and
  • does not correct payer-period W1 or W2 totals.

Escalate before proceeding

Contact your payroll adviser or Rebased Support when:

  • the employee disputes the overpayment;
  • leave loading, salary sacrifice, allowances, deductions or termination payments are involved;
  • super has already been remitted and the correction changes the entitlement;
  • the correction crosses financial years or affects a finalised Income Statement;
  • the corrected pay would be negative;
  • the leave request, timesheet and pay item disagree; or
  • you cannot identify which STP YTD fields require correction.
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