Add a pay item

Use pay items to set up the earnings, benefits, deductions, reimbursements, time off, and earnings orders you use for payroll. This way, you can add recurring pay items to an employee's pay, or adjust their pay for a single pay period for a one-time-only pay item like a bonus.

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 include pay items such as wages, tips, bonuses, or commissions.
  • Benefits are pay items such as employer pension contributions or health insurance.
  • Deductions include pay items such as retirement contributions or student loans.
  • Reimbursements are pay items such as mileage expenses or travel allowances.
  • Time off includes pay items such as sick leave, holiday, and statutory time off.
  • Earnings orders (attachment of earning) include pay items such as 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 for items like bonuses or commissions.
  • 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.

Set up 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 the Add button, select the pay item type you want.

    Image showing the pay type list under the Add button.

    If you are creating a custom pay item for Earnings, and it is your employee's main source of earning, select Regular Earnings to see this in the employee's employment tab.

  5. Name the pay item and complete any other details as needed.
  6. Click Add.

After setting up your organisation's pay items, you can make a one-time adjustment whenever 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.