Pay Items

Overview

Reckon One will already have a number of default Payroll items to use or edit. In the Payroll Settings area, click on Pay Items.

Pay items are displayed in separate tabs based on their pay item type. 

To create a new Payroll item click on Create pay item and select the relevant pay item type. Complete the mandatory and required fields. Then click on Save & close to save the new pay item.

To edit or delete a pay item, click on the relevant item from the list, then edit, change status to inactive, view history to see the audit trail or delete as required. If the Pay item has not yet been selected for an employee or used in a pay run it can be deleted, otherwise change the status to inactive so it won’t appear as an option in lists.

Earnings pay item setup

These are the choices that will be shown when you create or edit an earnings pay item, and what they mean:

1. Earnings type:
   1. Ordinary earnings – used for salary or wage payments.
   2. Overtime – provides a field to enter a multiplier for the employees normal hourly rate.
   3. Variable –used for payments not related to the ordinary hours worked like bonuses and piece work payments.
   4. Termination – used for payments like redundancy, compensation etc.  Leave balances paid out on termination will automatically be taken up when an employee is terminated.  There is no need to set up an item for this.
2. Pay rate basis:
   1. For OTE pay items select whether the pay rate you enter for the employee is an hourly rate or an annual salary rate.
   2. For variable items select whether the multiplier is hours or units, or other if there is no multiplier.
3. Expense account - select the relevant expense account that the value of the pay item is to be allocated to.  This will default to the expense account default in Payroll > General settings (if set up).
4. Include in time worked leave accruals - select if when time is paid on this pay item the number of hours will be used in leave accumulation done on a time worked basis.
5. Tax applicable - select if the pay item is to be taxed.
   1. If you select Tax applicable, you'll then need to select the Calculation method.
6. If the pay item is being paid on termination you will have to select a Termination type – this relates to the reason for the payment, not the reason for the termination (which is completed on the employee’s information).
7. Report as qualifying earnings - select if the item needs to be reported to the ATO as qualifying earnings (code Q).

Any field on an existing pay item can be revised except for pay item type, pay rate basis, calculation basis and tax applicable. 

Allowance pay items

1. Expense account - select the relevant expense account that the value of the pay item is to be allocated to.  This will default to the expense account default in Payroll > General settings (if set up).
2. Tax applicable - select if the pay item is to be taxed.
   1. If you select Tax applicable, you'll then need to select the Calculation method

• Use quantity if the rate has to be multiplied by a value not related to the hours worked.
• Use hourly if the rate has to be multiplied by the hours worked.
• Use other if it’s a flat rate with no multiplier

1. Default rate – enter default rate, if required.  This can be overridden when added to an employee or a pay run.
2. Limit - for allowances that have a limit, add the limit value and select if the limit applies to the pay run or the financial year.   Not required fields.
3. Tax applicable - select how the pay item is to be taxed.  Same options as for Earnings pay items.
4. Report as qualifying earnings - select if the item needs to be reported to the ATO as qualifying earnings (code Q).
5. Show as allowance on Payment Summary - select if the allowance value is to be included in the Allowance total on the Payment Summary.  The pay item name will be used in the separate allowance list.  If the value is to be included in the Gross Payments total, leave this check box un-ticked. 

Deduction pay items

1. Deduction type - select deduction type.  Select other unless the deduction value is to be shown as Union/Professional fees or Workplace giving on the Payment Summary.
2. Liability account - select the relevant liability account on the Balance Sheet that the value of the pay item is to be allocated to.  This will default to the liability account default in Payroll > General settings (if set up).  As an alternative to put the value straight into Accounts Payable select a supplier in the Payee field instead.  If a value is entered in both fields the liability account takes precedence.
3. Calculation basis - select calculation basis:

• Use quantity if the rate has to be multiplied by a value not related to the hours worked.
• Use hourly if the rate has to be multiplied by the hours worked.
• Use other if it’s a flat rate with no multiplier.

1. Deduct from gross before calculating withholding - select if the value is deducted from gross taxable earnings or net pay.
2. Default rate - enter default rate, if required.  This can be overridden when added to an employee or a pay run.
3. Limit - for deductions that have a limit enter the limit value and select if the limit applies to the pay run or the financial year.   Not required fields.

Reimbursement pay items

Learn more about reimbursement pay items and how to create and manage them in Reckon One.

Superannuation pay items

1. Sub type – select sub type from drop down list. The options displayed will be dependent on the sub type chosen.

 For the first 5 types of super, paid by the employer (the last 2 types are paid by employee):

1. Expense account - select the relevant expense account that the value of the pay item is to be allocated to.  This will default to the superannuation expense account default in Payroll > General settings (if set up).

For all superannuation pay items:

1. Default rate - enter a default rate if required.  This can be overridden when added to an employee.
2. Deduct from gross before calculating tax - select if the value is deducted from taxable earnings or net pay.
3. Pay items included - choose the pay items to include in the gross value that is used to calculate the superannuation amount (if the rate is a percentage).  Include pay items that are classed as ordinary time earnings by the ATO. 

If you create a pay item later that should be included in the superannuation calculation, the superannuation items will need to be revised to include it.

The liability for superannuation payments is taken up directly into a control account called Payroll Liabilities / Super payable.

This pay item type is not for superannuation.  It is used to create a liability for an expense related to an employee at pay run time.  It does not affect the employees pay, for example union fees paid by the employer.

Liability and Expense account - select an expense and liability account to record the amount.

Calculation basis - select calculation basis:

• Use quantity if the rate has to be multiplied by a value not related to the hours worked.
• Use hourly if the rate has to be multiplied by the hours worked.
• Use other if it’s a flat rate with no multiplier.

Default rate - enter a default rate if required.  This can be overridden when added to an employee.

Pay Items Included

 For Superannation Guarantee to be calculated, you need to choose which Pay items, superannuation is paid on. Under Pay items included, tick the boxes next to the Pay Item that you want Reckon One to calculate Superannuation on. 

Then click on Save & close to save the new Pay item.

Company contributions pay items

Learn more about company contributions pay items and how to create and manage them in Reckon One.

Leave pay items

Need more help?

Ask the Reckon Community at: https://community.reckon.com/categories/payrollapp

Or Log a Support Ticket: https://www.reckon.com/au/support/