Enter opening balances for an employee’s pay

Estimate your employees' opening balances when converting from another payroll system to Xero to correctly calculate and pay their leave entitlements. You only need to do this once, before the employee's first pay run.

About payroll opening balances

The opening balances are a record of your employees' historical pay information and are used to calculate the Average Weekly Earnings (AWE) and Average Daily Pay (ADP).

If AWE is greater than the employee's Ordinary Weekly Pay (OWP), it's used to calculate the rate for any annual leave paid out to the employee. ADP can then be used for any leave types subject to Relevant Daily Pay (RDP) rules (such as sick leave).

Before you start

Complete the employee's employment and salary information

Enter an employee’s opening balances

  1. In the Payroll menu, select Employees.
  2. Click the name of the employee you want to set an opening balance for.
  3. Select the Opening Balances tab.

    If you receive a message that the opening balances are not needed, you don't need to complete the remaining steps.

  4. Click Estimate opening balances.

    Xero estimates the employee’s historic pays including:

    • The period end date
    • The number of days that the employee was paid for
    • If they were on unpaid leave
    • Their gross earnings
  5. Review the estimated pay lines and edit or delete the pay information as required. For example, add additional lines for any extra pays.

    If you've been processing payroll in Xero for more than 12 months or have casual employees, contractors, or directors, delete all rows except one, and enter 0 into all fields.

  6. Click Save.

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