In cases where where an employee has been overpaid, administrators in PayHero can apply a time credit to correct the overpayment and reflect the intended value. Time credits will automatically deduct the overpaid amounts from the employee's future pays, making corrections a breeze.
Time credits are most commonly used via the timesheets to correct over-recorded hours, but can also be applied directly in draft pays.
If you've overpaid an employee, you can follow the steps detailed below to:
- Add time credits to the timesheets (if desired)
- Create a one off pay (to either pick up the time credit from the time entry, or manually specify the overpayment)
- Adjust the automatic deduction rate (if required)
Step 1 - Adding Time Credits via Timesheets
If an employee has been overpaid due to recording too many hours in their timesheets, it's best to add a time credit in their timesheets. If the overpayment wasn't entered via the timesheets, skip to Step 2.
Please Note: Time credits should only be used if the employee has already been paid for the time that was incorrectly entered. If the employee hasn't been paid yet, you can simply edit the time entry instead (Editing & Deleting Time).
To add a time credit to the timesheets, navigate to the Time Summary and click into the affected employee by clicking on their name. From the options button in the top right, select 'Add Time Credit'.
In the pop up that appears, you can set the appropriate details.
- Date - Ensure the date the time credit is applied for is the same date the employee was overpaid on. For overpayments that occurred on multiple days, each date will require its own time credit.
- Credit Hours - Enter the number of hours they were overpaid for on the selected date.
- Work - Select the same work option that the employee was overpaid against.
- Notes - Add any notes to the Time Credit if applicable.
Please Note: The rate applied for the time credit will be influenced by the date and work the time credit is recorded against. PayHero will use these details to identify a time entry falling on the same date for the same work, and will use the pay rate from that time entry as the rate for the time credit.
Viewing or Editing Time Credits
Once the credit has been saved in the timesheets, there are many places which will reflect the credited time. Click the buttons below to learn more.
Once the credit has been saved, there are many places which will reflect the credited time. The amended total hours for the day will be visible from the Work Summary at the bottom of the employee's timesheet:
You can also click the down-arrow for that day to display a list of entries, which will show both the original time and any time credits:
The amended total will also display on the Time Summary overview tab, and the day will no longer show as 'Paid' (until the credit is included in a pay - see Step 2 below).
You can also see the amended total on the Timesheets overview tab:
If you need to make any adjustments to the credit after it has been saved, you can do so by navigating to the employee's timesheets (click their name on the Time Summary page). Scroll to the bottom of the time calendar, and click the down arrow for the day the credit has been applied to.
In the list of time entries for the day, click the pencil icon on the Credit line.
The Edit Credit pop up will appear, allowing you to view and edit the details, or click the Delete button in the bottom left delete the time credit.
Note: Just like regular time entries, you can only edit or delete time credits if they aren't already included in a pay. Learn more here: Why do time and leave entries show as Paid?
Step 2 - Creating a One Off Pay
You can skip Step 1 and jump straight to this step if you don't want to enter the credit via the timesheets.
To process a credit for overpayments, you'll need to create a one off pay. The pay should cover the same dates (start and end date) as the original pay period the overpayment occurred in, and the pay date should be today:
You can learn more about how to process a one off pay in our support article here: One Off Pays
Once you've created the draft one off pay, use the green plus button at the bottom left to add the affected employee(s).
Your next steps will depend on whether you've entered the credit via the timesheets (see Step 1 above), or wish to apply it directly in the draft pay. Click the appropriate button below to learn more.
Once the employee is added to the one off pay, it will be automatically populated by the Time Credit you added into the timesheets. You'll see a Pay Warning icon and two pay lines.
- Pay Warning - This pay warning is expected and indicates a Time Credit is being applied in the pay and will be deducted from future pays.
- Negative Hours/Units - This will be a pay line with a negative quantity, recorded against the selected Work option that the time credit was recorded against. The pay item used will be defined by the selected Work (you can check this under Manage > Work).
- Time Credit - The 'Time Credit' line is added to balance out the negative total and bring the total earnings to $0. The 'Total' amount of the time credit is how much the employee will have to repay via deductions from their upcoming pays.
Any other pay lines in the pay, such as Tax, should also have a total of $0.
Important: Any custom default payments or deductions which may normally apply for the employee should be removed from their pay.
Once all details in the pay total $0, you can send the pay as you would usually by clicking Send Pay, or using the Mark as Sent option to finish processing the one off pay.
Using Mark as Sent will prevent PayHero from taking any extra actions when moving the pay across to Payroll > Sent. This will avoid sending out payslips to staff, submitting a filing to IRD, and creating an invoice in Xero (if integrated). This option may be preferable as a result. Learn more here: What is the difference between sending a pay, resending a pay, and marking a pay as sent?
The employee will now be set up to repay the total amount of
Once the employee is added to the one off pay, you'll need to add the overpayment as a negative amount.
First, click the green plus button under the 'Earnings' section of their pay, and select the pay item the employee was originally overpaid against:
Next, specify the quantity and rate the employee was overpaid by. Make sure the Quantity is set as a negative value:
Click Apply to save your changes. The pay will reload, and you'll now see a Pay Warning icon and two pay lines.
- Pay Warning - This pay warning is expected and indicates a Time Credit is being applied in the pay and will be deducted from future pays.
- Negative Hours/Units - This will be the negative quantity pay line you added to the pay.
- Time Credit - The 'Time Credit' line is added to balance out the negative total and bring the total earnings to $0. The 'Total' amount of the time credit is how much the employee will have to repay via deductions from their upcoming pays.
Any other pay lines in the pay such as Tax, should also have a total of $0.
Important: Any custom default payments or deductions which may normally apply for the employee should be removed from their pay.
Once all details in the pay total $0, you can send the pay as you would usually by clicking Send Pay, or using the Mark as Sent option to finish processing the one off pay.
Using Mark as Sent will prevent PayHero from taking any extra actions when moving the pay across to Payroll > Sent. This will avoid sending out payslips to staff, submitting a filing to IRD, and creating an invoice in Xero (if integrated). This option may be preferable as a result. Learn more here: What is the difference between sending a pay, resending a pay, and marking a pay as sent?
Step 3 - Manage Employee Deductions
Once you've processed a one off pay for the time credit, the value of the overpayment will be automatically added to the employee's Default Pay tab for automatic deduction from any upcoming pays.
To view this, navigate to People > Employees, click into the employee record, and select their Default Pay tab,
- Rate - The pre-tax deduction rate applied per pay. Set this field as a negative rate for a 'pre-tax deduction'. The default repayment rate applied will be $50 per pay. If a different rate is required it will need to be adjusted to suit. Ensure the rate is set as a negative rate, so it's correctly applied as a pre-tax deduction. e.g. -100 for a $100 deduction.
- Current Balance - The total amount overpaid to be recouped.
Deductions in Future Pays
PayHero will automatically include the pre-tax deduction for the employee in the following pay runs until the 'Current Balance' on the employee's Default Pay tab reaches $0. This will apply using the same functionality as Track Balance.
Comments
0 comments
Article is closed for comments.