What is retro pay

If the process takes days or longer, the employer is subject to additional financial penalties. The amount owed is highly personalized to you. The total includes factors such as base pay, acting pay, overtime as well a variety of other elements of compensation. The two most important factors are the time that has elapsed since the expiry of your old contract the length of the retro period as well as your base pay.

The longer the retro period, the more the retro pay. The higher your salary, the more your retro pay. Your payment may come all at once but there is no guarantee.

Payments may be staggered for more complex cases. The employer has days from the date of signing to provide you with the sum total of the retro amount owed before additional penalties apply. Each retro payment received will be accompanied by a detailed breakdown in the Collective Bargaining Agreement Retro Adjustment of your online Phoenix account.

Mass retroactive payments processed by Phoenix prior to the Retro Redesign Solution are still available in the pay system. Information about these payments will be accessible in the same place as your pay stubs. Each retro payment received will be accompanied by a detailed breakdown in the Collective Bargaining Agreement Retro Adjustments of your online Phoenix account. These records will include substantial information about the origin of the payment.

Back pay is a type of retro pay in which an employee is owed all their wages for a pay period after that period's payday. It's what employees demand when they aren't paid at all for a pay period.

Where retro pay often stems from accounting errors, back pay may have more sinister origins. In fact, the term "back pay" is often used to describe a court-ordered payment of wages owed to an employee. Courts may also require employers who owe back pay to double the amount to be paid. This fact should make it pretty clear why back pay is important to issue well before your employee threatens legal action. Whether you're issuing back pay or retro pay, the stress is similar: How can I assure the employee that I do intend to pay them?

How can I ensure this won't happen again? How can I calculate retro pay correctly to nip this issue in the bud? That's where payroll software comes in. Your payroll software will handle and automate all your wage calculation, payment and tax needs, and help you keep accurate paycheck records. All you have to do is ensure your payroll software has the correct numbers to work from.

Then you can sit back and let it calculate and issue all your paychecks. These calculations include employee and employer payroll taxes , helping you comply with tax laws.

Payroll software comes in many varieties. OnPay, for example, is ideal for very small businesses given its low fees and untiered feature access. Read our OnPay review for more information. Paychex may be better for larger businesses with many employees, where it's more likely you'd make the tiny errors that necessitate retro pay in the first place.

A payroll service like Paychex can help you avoid those mistakes. Visit our best payroll service reviews to find the right fit for your company so that you can avoid making payroll errors and issuing retro pay — but if you do need to issue retro pay, that'll be easy too with payroll software.

What Is Retro Pay? Max Freedman. Retro pay is the difference between what you paid employees last pay period and what you actually owed. Here's how to issue retro pay and, next time, avoid it. Retro pay is the difference between what you paid employees last pay period and what you actually owed them.

You can issue retro pay via separate paychecks or, more commonly, as miscellaneous income in the employee's next regular paycheck. Payroll software can help you calculate and issue retro pay, while minimizing the issues that lead to retro pay in the first place.

This article is for employers looking to understand retro pay and the process of making up for accidental gaps in employee pay. What is retro pay? When is retro pay usually applied? These errors include: Salary raises. Let's say you pay your employees bimonthly on the 15th and 30th of the month.

There are so many moving pieces that are necessary in paying a staff on time and in full. What happens, though, when that payment is incorrect? Payroll mistakes are rarely intentional, but mistakes can still happen throughout the payroll process. Business owners are often stretched thin, covering a wide range of other responsibilities.

What Is Retro Pay? Retroactive pay makes up for the difference between the amount an employee was paid and the amount they were owed during that time. It is often paid as a separate payment or added to the next paycheck once the discrepancy is discovered. This is different from back pay, which sounds similar but is another process that is often discussed.

Back pay means paying an employee their owed wages that were not ever paid. That is less common than retro pay, which is simply fixing a difference between what was paid and what was supposed to be paid. How to Calculate Retro Pay. As with any payroll process, calculations depend on several factors, though these are often fairly simple to determine. Most importantly, you will need to verify the period of time there was a payment discrepancy along with the type of pay hourly or salaried.

Legal considerations In addition to the examples of retroactive pay discussed above, there are certain cases where retro pay may be court ordered. Here are some circumstances when a judge may order retro pay by law: Discrimination If a judge determines an employer issued pay increases to a segmented group based on characteristics like race or gender, they may award retro pay to affected employees.

Breach of contract When an organization knowingly violates an employment contract and pays less than the agreed-upon rate, retroactive payments may be demanded by a court of law. Overtime violations Retro pay may be ordered if an employer fails to compensate employees appropriately according to their overtime rate.

Under-the-table pay If an employer is caught paying employees under the table for less than minimum wage, a judge may require the employer to issue retro pay. Less than minimum wage If an employer pays workers less than the FLSA minimum wage, they may be subject to retro pay. This content is for information purposes only and should not be considered legal, accounting or tax advice, or a substitute for obtaining such advice specific to your business.

Additional information and exceptions may apply. Applicable laws may vary by state or locality. Intuit Inc. Accordingly, the information provided should not be relied upon as a substitute for independent research. Readers should verify statements before relying on them. Up next. Why you should conduct an annual payroll audit.