How to apply a back payment | Payroll Guide


As an organisation, you may apply a pay rise to an employee and wish to process back pay from a certain date. Outstanding back payments may occur if the pay rise update was agreed to earlier, but the update was not applied before a pay run. Back payment lets you change an employee's pay rate and pay any outstanding payments if their pay rate was not updated before a pay run.


Payroll Plan:   Standard   Premium

What you need to do

There are three steps that an administrator needs to complete, to apply a back payment after you have updated an employee's pay rate. An administrator needs to complete these actions in the payroll platform. The three steps are:

Step 1: Set up a back payment pay category
  1. Log into your Employment Hero Payroll platform.
  2. Click the   Business Settings menu.
  3. Click the  Pay Categories button.
  4. Click the Add button.
  5. Enter a name for the new category. In this case, enter Back Payment. 
  6. Click the Save button.
  7. In the Units drop-down select the Fixed option.

    Helpful Hint

    If you paid overtime during the back pay period, then you will need to either manually calculate the overtime back pay required and enter this amount into the back pay earnings line, or select Hourly for the Units and link this new pay category to a penalty loading that matches your usual penalty rates. 

  8. Click the Save button. 
Step 2: Calculate the total pay back amount
  1. Log into your Employment Hero Payroll platform.
  2. Click the  Reports menu.
  3. Click the Pay Categories Report button.
  4. Select the Date Range for the dates the employee need backpaying.
  5. Select the employee's standard pay category, and the employee name.
  6. Click the Run report button.

    Helpful Hint

    Note the number of paid hours, and the difference between the employee's previous rate and the new rate that they will be paid.

Step 3: Process the back payment
  1. Log into your Employment Hero Payroll platform.
  2. Click the  Pay Runs menu.
  3. Open the required pay run.
  4. Select the employee that needs back-paying
  5. Click the Actions button.
  6. Click the Add Lump Sum Payment button.
  7. Select the Back Payment pay category you created in the previous steps.
  8. Enter the total number of hours to backpay and the difference between their old pay rate and new pay rate.
  9. Click the Save button.

    Helpful Hint

    Your next pay run will now include the back payment owed to the employee.


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Author recommended

So you have now applied a back payment and you are now wondering, what next can I do. There are two recommendations I would make on this front and they are:

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