Set up custom pay items

Set up the types of earnings, deductions, leave, statutory deductions, superannuation, and reimbursements your organisation plans to use for payroll.

How it works

Pay items help you customise and track the way you pay each employee. Xero provides a set of default pay items for you to use. If you need pay items other than the defaults, add your own to fit your organisation's needs. For example, if your organisation has a social club, set up a deduction so you can add it to your employees pay run.

Before you set up employee pay templates or process your first pay run, make sure you have:

  • Included all the right pay items for your organisation
  • Mapped your pay items to the appropriate accounts

Add pay items

  1. In the Settings menu, select General Settings.
  2. Under Features, click Payroll Settings.
  3. Click the Pay Items tab.
  4. Under the Add button, select the pay item type you want.

    • Earnings: Select Regular Earnings if you're creating a pay item for an employee's main source of income.
    • Redundancy: Select Other Gross Earnings to calculate holiday pay in the redundancy payment. Otherwise, select Withholding Income.

  5. Name the pay item and complete any other details as needed.
  6. Click Add.
  7. Repeat these steps for each custom pay item your organisation uses.

After setting up your organisation's pay items, add them to your employees' pay templates so they are included in each pay run.

Types of pay items

You can add the following kinds of pay items:

  • Earnings such as wages, bonuses, or commissions
  • Deductions such as payroll giving or union fees
  • Reimbursements such as mileage expenses or travel allowances
  • Leave such as bereavement or parental leave
  • Superannuation such as KiwiSaver
  • Statutory deductions such as child support or court fines
  • Separated payments to split out wages and pay them from different cost centres

Image showing the pay type list under the Add button.