How to correct a payroll month that has already been paid

It happens in every company: a bonus is entered twice, a raise is missed, a leaver is paid for a month they did not work. The payment has gone, the payslip has been published, and now the question is how to fix it without making it worse. The answer is the same in each case: leave the paid month alone and correct the difference in a separate run.

First, decide which kind of error it is

Before you touch anything, name the error. The fix depends on the type, and the types are few.

• A missing amount: a raise, an overtime sheet or an allowance that never reached the run. Pay the difference.
• An extra amount: a duplicate entry, a leaver paid after leaving, a wrong rate. Recover the excess.
• A wrong place: the right amount in the wrong month. Move it, and check what that does to the year’s tax.
• A wrong person or account: money sent to the wrong payee. This is not a payroll correction. Stop, tell finance and your bank at once, and treat it as an incident.

Why not just edit the month?

A paid month is a record that other things depend on: the payslip the employee holds, the tax certificate, the provident fund register, the bank file you sent, the report your auditor will read. If you change it afterwards, all of those silently disagree. A correction run keeps the original intact and adds a visible, dated adjustment beside it.

Underpayment: pay arrears

Someone was owed more than they received.

1. Work out the difference, not the whole amount: what they should have been paid less what they were.
2. Pay it in the next run, or in an off-cycle run if it cannot wait.
3. Keep the reason with the entry (for example, a raise that took effect in an earlier month), so the payslip explains the extra amount.

Tax, provident fund and any other component affected by the correction are recomputed on the difference.

Overpayment: recover, do not claw back by hand

Someone received more than they should have.

1. Work out the excess.
2. Book it to a recovery register against that employee, with the reason.
3. Deduct it from a later payroll, in one go or in instalments you agree with them.
4. If they leave before it is recovered, net what remains in their final settlement.

Never issue a second full salary to “fix” a month, and never ask for the money back outside the payroll where it cannot be tracked.

A worked example (illustrative)

Suppose a company pays a one-off bonus of 20,000 rupees to an employee, and the same bonus is keyed twice, so 40,000 rupees go out. The payslip is published and the bank file is sent before anyone notices.

The wrong fix is to edit the month or to ask the employee to send 20,000 rupees back by transfer. The right fix has four steps:

1. Open a recovery for the 20,000 rupees excess against that employee, with the reason: a duplicate entry.
2. Tell the employee, with the payslip lines in front of both of you, before the deduction appears.
3. Deduct it in the next run, or in instalments if they ask and a manager agrees.
4. Recompute the year’s tax on the corrected income, because the extra bonus counted as pay for the year and the recovery undoes it.

The original month is untouched. The correction is a separate, dated entry that anyone can read.

Keep the year’s tax right

A correction changes what someone earned in the tax year, so it changes the year’s tax. Recalculate the year’s tax on the corrected income and let the remaining months absorb the difference. A payroll that only adjusts the month in question can leave the year wrong, and the employee finds out in June.

Record who decided

A correction is a payment decision. Make it with the same approval as a normal run, and keep a record of who approved it and why. That record is what you show an auditor, and what an employee can be shown if they ask.

Tell the person

An overpayment recovered without warning feels like theft, and an arrears payment nobody explains feels like luck. Either way, say what happened before the payslip does. A short note works: what was wrong, how much, how it will be fixed, and when. It costs two minutes and prevents most of the awkward conversations that follow a correction. If the sum is large relative to their pay, agree instalments rather than one deduction, and put the agreement in writing.

Prevent the next one

Most corrections trace back to the same few causes: late inputs, a salary revision missed, a duplicate entry. The month-end checklist is aimed at exactly those, and the approval trail described under approvals and audit shows afterwards who decided what. In WageVerge, a supplementary run computes only the delta, books overpayments to the recovery register, and keeps the year-to-date tax correct.