[Guide] Back salary calculation in payroll

20 March, 2019
By G-Team in Payroll
Gpayroll payroll software blog - payroll

How much do you know about the back salary calculation in our payroll software? Saw a back salary payment in your employees' payroll and not sure what it is? There could be several reasons why a back salary occurs and we will share more below.

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In Singapore, in accordance to the Employment Act, the employer must pay the employees' salaries at least once a month and within 7 days after the end of the salary period. Salary refers to remuneration, including allowances, paid for work done under a contract of service. All employers must issue key employment terms (KETs) in writing to employees covered by the Employment Act. Say for example, you have a new employee who joined the company on the last working day of the month but your company pay day falls on the 15th of each month. You can process an additional payroll cycle for your new hire in that month OR you can process the payroll in the next month payroll cycle.

If your company choose the prior, payroll calculation for the new hire is as usual. However, for the later option, your company will need to pay back the one day salary which the employee has worked in the last month. Our software will take care of this automatically based on the option you choose. Next, here is another scenario, where back salary calculation will occur. This happens when an incorrect salary increment is given with an incorrect effective date.

Under the employee's profile, user can update the salary details.

Very often, user clicked on "Edit" instead of "Add New" for salary increment. What will happen if "Edit" is selected, where salary is changed to $2,000? Back salary calculation will be performed with $2,000 with effect 1 April 2016. Why this happened is because the employee is paid $1,000 effective 1 April 2016 in the employee's historical payslips (assuming no salary change) but the user inserted the payroll instruction that salary is $2,000 effective 1 April 2016. The software will check those months which the employee are not being paid $2,000, and this will amount to the back salary payment.

Using the "Delete" function, user can remove the each salary record individually. This will be used for removing any incorrect entries that are entered previously. The top most entry will be deleted first. For example, the $8,000 salary record will be deleted first. After this record is deleted, the $8.50 salary record under "Salary History" will become the top most entry for editing.

Above is the payroll basics useful for any small business owners. You need not be a payroll expert when our payroll software takes care of the basic necessity of payroll for you.

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