Payroll Back Pay

Question

Good day All, 
 
 I hope your well. 
 
 I need some assistance. I was informed that a decision has been made to give all staff a certain percent increase on salaries and that it should of been affective from March, although my Payroll has been processed, salaries paid etc. And i should do it as a back pay. So in April i am suppose to give everyone the increase double but it should not affect our tax grade. 
 
 Can anyone assist with a way i can do this? Do i just add the increase on everyone salaries and let Payroll work out the tax, UIF and SDL or is there another way to do this as i do not want to let one of the employees fall under a higher tax grade/level? 
 Your response would be highly appreciated. 
 
 Kind regards 
 Nadia

Shazi · Accepted Answer

Good day LPD. 
 Thank you for your post. 
 W e do not advise that you roll back to the period the increase was applicable from as you will then need to redo each period again after the roll back when you roll forward again and you will also need to restate your EMP201's for these periods. So we advise that you firstly calculate what the back pay amount should be so that you can add this amount on the current period payslip as back pay. And then for this current period on the hours and rates tab correct the hours and rates so that the increase is correctly reflecting and then save the hours and rates.

You may need to link the required back pay definition to the template, and then add it to the Payslip. To add this, click on: 
 - Company 
 - Global Payslip Definitions 
 - click on Payslip Definition Template tab. 
 - Click on the + sign next to the earnings and add the required back pay definition 
 
 Before you save please ensure that you have ticked the company/cycle on the far right hand side of the screen under the title "Linked to cycle". 
 
 Adding it to the Payslip: 
 
 Navigate to Payroll, 
 Select the Employee in question 
 Select the payslips tab 
 Click on the plus sign next to the earnings 
 Select the back pay transaction required 
 Click on OK 
 
 To increase an employee salary / wage please click on Payroll>Hours and Rates>Select applicable employee>scroll to the bottom>enter new increase next to fixed salary description. You will follow these steps in the pay period the increase is applicable from. 
 Because the back pay definition is taxable it will be included in the taxable year to date calculation and the system will automatically calculate the correct PAYE, UIF and SDL for the current period. Any changes to the PAYE will be correct if the back pay and increase is correctly processed in the current period. 
 Please consult with your tax practitioner for further information regarding the tax implications. 
 You can view the detailed tax calculation by selecting "view tax calculation" on the employee payslip tab once the back pay and increase has been processed in the current period. 
 Kind regards 
 Gerhard

Sage Payroll

Payroll Back Pay

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