Add a custom pay item

Use pay items to set up the earnings, benefits, deductions, reimbursements, time off, and earnings orders you use for payroll. You can then add recurring pay items to an employee's pay. For example, if your organisation has a social club, set up a deduction so you can add it to your employees pay run. Or you could adjust their pay for a single pay period for a one-time-only pay item like a bonus or commission.

How it works

  • Pay items help customise and track the way you pay each employee. You can add the following kinds of pay items:
  • Earnings are pay rates like wages, tips, bonuses, or commissions.
  • Benefits only cover employer pension contributions made in addition to the employee's pay.
  • Deductions take payments out of your employees' pay to cover commitments like retirement contributions or student loans.
  • Reimbursements are for out-of-pocket or other expenses you reimburse employees for like mileage expenses or travel allowances.
  • Time off pay items record any time off like sick leave, holiday, or statutory time off.
  • Earnings orders (attachment of earning) are pay items like child support or civil debts.
  • Assign recurring pay items (like deductions) to employees every pay run or add pay items to adjust their pay for a single pay period.
  • Choose from default pay items loaded by Xero or add your own custom pay items, making sure you assign the account it records to in the general ledger.

Add a pay item

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

    Image of the Earnings pay item list.

    • If you're creating an Earnings pay item and it's the employee's main source of earning, select Regular Earnings to see it in their Employment tab.
    • If you're creating an Earnings pay item for keeping in touch days, select Other Earnings. When you add it to the employee's pay template, enter the rate as a multiple of one times the employee's ordinary earnings.
  5. Name the pay item and complete the 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, you can make a one-time adjustment when you like or add them to your employees' pay templates and time off balances to make them recurring.

For example, if an employee has an attachment of earnings order (AEO), set up the pay item and add it to the employee pay template so it includes in each pay run.