This video explains how to use Employment Hero Payroll’s backpay automation feature to streamline complex payroll processes. It demonstrates how to update an employee’s rate of pay, calculate back payments across multiple pay periods, and apply the correct tax and adjustments automatically. The tutorial walks through selecting employees, reviewing old and new rates, overriding calculations if needed, and finalising back payments in a new pay run. It is particularly relevant for payroll specialists and organisations operating under the SCHADS award, helping them ensure accurate, timely backpay while reducing manual errors. The step-by-step guide makes it easier to manage backpay for one or multiple employees efficiently.
Today we're unlocking Employment Hero Payroll's powerful backpay automation feature. As payroll specialists who process thousands in backpay calculations, we'll show you how to turn complex scenarios into a seamless process. In this video, you'll learn how to calculate rate differences, handle multiple pay periods, and process everything in just a few clicks.
So I am going to run a back payment for the employee Tasha here. I forgot to update Tasha's rate of pay, and it is now the start of August, but Tasha should have been paid this rate all the way back to the 1st of July.
First of all, I'm going to go to Tasha's employee file and go to pay run defaults and update Tasha's rate here. Now that we have that rate updated, I'm going to come back to the home screen and navigate to the automatic back payment feature by opening up payroll settings. Underneath the pay conditions heading, we have back pay. From here, I'm going to add a new back payment.
Once you've clicked on the add button, you'll have a second button to add employees. This allows you to create a back payment for multiple employees if you've updated several employee files and their rates.
The first thing we need to do is select the pay schedule that this is related to and that the employee is normally paid out of. I'm going to select fortnightly. Then, select the date range that the rate increase was actually applied on the employee file. I just applied the rate today, so I'll select the date range as within this pay period. Then I'm going to search, and this will bring up a list of any employees that had a pay rate increase within this date range. I can see two employees had a rate increase, but I'm just selecting Tasha in this example. For multiple employees, you can select whichever employees you want to update from here. Then click on Add.
Now, I can see the employee, and it's going to pull in their old rate of pay, their new rate of pay, the rate difference, and the total lump sum. You can select what the effective date of the rate change should have been, and it will recalculate based on this date. Hovering over the eye icon shows a breakdown of all their hours, calculated on whatever rate of pay—whether it be overtime, penalty rates, or top-up hours.
If you need to manually override the rate, that can be done as well. Click the override button to manually adjust the total lump sum amount or the old pay rate. I'm going to click refresh here, and it recalculates based on the new effective date. Again, hovering over the eye icon shows a full breakdown of everything that was paid.
Once I click on Complete and confirm with "I understand," this back payment will automatically be applied to the next pay run.
Next, I'm going to create a new pay run and add the affected employee. At the top, we can see the Back Payment tab, which shows the back payment we've applied. If multiple employees were included, all would be visible here. You can see the effective-from date, the amount being paid, and select the calculation method, whether it be A or B2.
If we select calculation method A, we can choose how many pay periods are covered. It automatically assigned four pay periods since there have been four fortnightly periods between the 1st of July and the current date. It will automatically calculate the tax based on this lump sum being paid across the four pay periods. You can also add notes and then apply it. The back payment will now be visible in the pay run and paid out within this pay run.