Back out or make corrections to a paid pay run

If a paid pay run has incorrect wages or taxes, you may be able to cancel the payment or correct the error using the reverse a pay run process. Then you can create an unscheduled pay run to make the correct payments.

How it works

You can reverse most pay runs that have dates within the current pay period, the next two future pay periods, or in the last eight historic or previous pay periods.

You cannot reverse pay runs that are already:

  • Associated with deleted pay schedules

  • In draft status

  • Negative in value

  • Reversed using the reverse pay run process

When reversing a pay run, you can select the employees whose pay you want to reverse. You can reverse an employee's pay unless:

  • You've already reversed it

  • Their paystub contains negative values

  • They are assigned to a different pay schedule than the one used in the pay run you want to reverse

    For example, if you have recently changed an employee from a monthly to weekly pay schedule, you will need to temporarily change them back to a monthly schedule to reverse any pay run where they were paid on a monthly basis.

  • Their employment ended before the first day of the pay period you want to reverse

    In this situation, you will need to temporarily change the employee's status to active before you reverse the affected pay run.

Before starting

There are two checks that we recommend making first:

For almost all other pay run errors, such as overpaying or underpaying an employee, or miscalculating taxes, the easiest way to fix this is to reverse a pay run.

Reverse a pay run

Cancel any scheduled tax payments and revert tax filings for the dates of the pay run you want to reverse, before you reverse the pay run.

If you've already paid taxes or filed tax returns for those dates, you may need to correct a tax payment.

  1. Go to Payroll, then click Pay Runs.

  2. Select the pay run you want to reverse. You will see a blue alert if any employees listed in that pay run are eligible to have their payments reversed.

    Pay run with a blue note explaining that it can be reversed.

  3. Select the checkboxes for any employees you want to reverse payments for.

    Ineligible employees will have a next to their name. If you hover your cursor over the Xero will display the reason why the employee is ineligible.

    Note explaining why an employee is inelligible for a pay run reversal.

  4. (Optional) To void the employees' check numbers, click Void Check Numbers, then click Yes to confirm. You will see a green alert confirming that the check numbers have been successfully voided and reassigned.

  5. (Optional) To add a memo to the reversal, click Memo to write a note up to 40 characters and then click Apply to confirm. You will see a green alert confirming that the memo has been added to the pay run.

  6. Click Reverse Pay Run in the alert, or under the Options menu. Xero will create a draft pay run for the employees you have selected, with a blue alert letting you know that a reverse pay run uses the same payment date as the original pay run.

  7. If you are happy with the reversal details, click Reverse Employees.

  8. Click Complete Pay Run. You will see a green alert confirming that the payroll has now been paid.

  9. Click Back to return to your list of pay runs.

  10. Make an unscheduled pay run to make the correct payments.