Correcting an Overpaid Allowance

The way you correct an overpaid allowance depends on whether payment has already left the bank.

Before you can fix the employee’s year-to-date values and recoup the money on the next pay, the employee must first agree to have their pay adjusted.

If payment has already left the bank

  1. Create an adjustment pay for the affected employee.
    Note: For steps on how to create an adjustment pay, see Adjusting Pays.

  2. Go to the positive adjustment pay and make the adjustment to the allowance:

    1. Assuming the employee received some super contributions from the employer, these transactions will appear as negative entries on the Superannuation Batch Details form (MPPP5006).

    2. These negative entries are reconciled with other positive entries when the batch is submitted—as long as the net contribution of the employee is positive, the batch will be processed.

      1. If the net contribution is negative, they can exclude the relevant negative contributions to get the batch processed.
      2. In such cases, they will generally have to work with the relevant clearing house to get back the overpayment, or write it off as a loss.

  3. Complete the positive adjustment pay and submit an STP Update event. No payment batch is created as no further payments will be made to the employee from the adjustment.

  4. Set up a post-tax deduction with a Deduction Category of “Net Pay Disbursement”. This deduction must have a GL posting class associated with the same GL clearing account used for wage/salary payments.

  5. Add the configured deduction to the employee’s next current pay and enter the net amount of the overpayment.
    Note: When following this process there will be a discrepancy between the total net pays in the system and the amounts paid to the employee. This is because the Net Pay Disbursement post-tax deduction is deducted from the employee's net pay. The amount paid to the employee is correct.

If payment has not yet left the bank

  1. Perform the adjustment as per steps 1 to 3 in the scenario above.

  2. Generate a payment batch using the Generate Payments action on the Pay Run Details (MPPP3120) form.

  3. Go to the original pay and perform the same action—this voids the original payment batch and journal entries and recreates the batch, excluding any adjusted employees.
    Note: If all employees in the original batch have been adjusted, the original payment batch cannot be voided. We will be looking into how we can improve this.