When a payroll error is reported, acknowledge the concern, preserve the relevant records and establish what happened before deciding the correction. Tell the employee who is handling the issue and when they will receive an update.
Do not assume an error affects only the net amount deposited. Hours, rates, leave, tax, superannuation or the payslip record may need separate checks by the appropriate payroll or professional adviser.
Define the issue and affected period
Record the employee, pay period, item questioned and how the issue was identified. Compare the relevant records, applicable pay basis and calculation. Distinguish the employee’s concern from a confirmed finding until the review is complete.
The Fair Work Ombudsman’s record-keeping guidance explains that required records must be accurate and cannot be altered except to correct an error. Follow the applicable correction process rather than overwriting information without an explanation.
If the issue may affect more than one period or employee, assign an appropriate review. Do not limit the investigation to the first example merely because that is easiest to calculate.
Use a practical payroll-correction record
Track:
- Report: the concern, date received and contact responsible.
- Scope: periods and payroll components to check.
- Evidence: records and applicable instruments reviewed.
- Finding: confirmed error, calculation and remaining uncertainty.
- Action: authorised correction and related reporting checks.
- Communication: explanation and update dates for the employee.
- Verification: confirmation that the action was processed correctly.
- Prevention: the cause to investigate and any system change required.
Keep personal and financial details in the approved restricted process. A general team update should not expose an employee’s pay records.
Communicate a verified result clearly
In this original fictional example, payroll confirms that an approved additional work period was omitted from processing. The employer explains the affected period, provides a checked calculation and confirms how and when the correction will be made.
The employee is told how to raise a discrepancy in that explanation. Payroll also checks whether related records or reporting need correction. No rate or payment amount is invented in this example.
For a confirmed underpayment, arrange prompt correction through payroll and explain the payment date to the employee. Where the review is still underway, say what is being checked and when another update will be provided. Do not describe an unprocessed correction as money already paid.
Handle overpayments through the proper process
An apparent overpayment needs verification too. The Fair Work Ombudsman’s overpayments guidance recommends discussing and agreeing on a repayment arrangement, with a written agreement if the employee agrees to repay.
Its deductions guidance explains that deductions are permitted only in limited circumstances. Do not automatically deduct a disputed amount from the next wage payment or assume a general contract clause resolves every requirement. Obtain advice where needed, including when agreement cannot be reached.
Verify the correction and address the cause
Check the processed result against the approved correction and provide the appropriate updated records. Confirm the employee has a contact for follow-up without requiring them to waive an unresolved concern.
Investigate whether the issue arose from an incorrect setup, missing approval, unclear instructions or another cause. Assign an owner to the preventive action and test it in the next relevant cycle. A transparent correction process shows both what was fixed and how the employer will check that the same problem does not recur.
