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 correct the error using the reverse 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 can't reverse pay runs that are:
- Associated with deleted pay schedules
- In draft status
- Negative in value
- Reversed already using the reverse pay run process
- Include a submitted direct deposit payment
When reversing a pay run, you can select the employees whose pay you want to reverse. You can't reverse an employee's pay if:
- You've already reversed it
- Their paystub contains negative values
- They're assigned to a different pay schedule than the one used in the pay run you want to reverse. For example, if you've recently changed an employee from a monthly to weekly pay schedule, you'll need to temporarily change them back to a monthly schedule to reverse any pay run where they were paid on that basis.
- Their employment ended before the first day of the pay period you want to reverse. You'll need to temporarily change the employee's status to active before you reverse the affected pay run.
Before you start
- Check the opening balances for the pay run you'd like to back out. If you discover errors, add employee opening balances for current quarter. 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.
- 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.
Reverse a pay run
- In the Payroll menu, select Pay Runs.
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.
Select the checkboxes for any employees you want to reverse payments for.
Ineligible employees have a next to their name. If you hover your cursor over the Xero shows the reason why.
- (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.
- (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.
- 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.
- Select the checkboxes for any employees you want to reverse payments for.
- If you're happy with the reversal details, click Reverse Employees.
- Click Complete Pay Run. You will see a green alert confirming that the payroll has now been paid.
- Click Back to return to your list of pay runs.
- Make an unscheduled pay run to make the correct payments.