Sprout Payroll: How to Reconcile Overpayment from Salary Increase

If you have reached this page, I would assume that you have read our article talks about How to Implement a Salary Increase in the Sprout System.

In that article, we discussed two scenarios:

1. Implementing salary increase if the effectivity date is not yet beyond the current date.
2. Implementing salary increase if the effectivity date is already beyond the current date.

Employee A	Employee B
Payroll Cut Off: January 16-31, 2021	Payroll Cut Off: January 16-31, 2021
Current Date: January 20, 2021	Current Date: January 23, 2021
Increase Effectivity Date: January 21, 2021	Increase Effectivity Date: January 20, 2021
Old Salary: 10,875.00	Old Salary: 10,875.00
New Salary: 21,750.00	New Salary: 21,750.00

Please note that for both scenarios mentioned above, the new salary will take effect starting January 16, 2021. Given this, there will be an overpayment for the days when the old rate should still be followed.

But no worries, what we can do here is to make manual adjustments in Sprout Payroll. Here's how:

1. Get the number of overpayment working days for Employees A and B. Let's say both employees follow the 261-factor rate, meaning, they are only required to work from Mondays-Fridays for the calendar year.
   
   So for Employee A, there are 3 overpayment working days (January 18-20)  and 2 days (January 18-19) for Employee B.
   
   
2. After step 1, get the difference between the daily rates based on the old rate and the new rate. Here's how: How to Calculate for the Daily Rate from Your Monthly Salary?
   
   Old Rate: 10,875 x 12 / 261 = 500
   New Rate: 21,750 x 12 / 261 = 1000
   Difference: 500
   
   
3. Compute for the overpayment amount. The number of the overpayment days must be multiplied by the difference between the old rate and the new rate:
   
   Scenario 1: 3 overpayment days x 500 = 1500
   Scenario 2: 2 overpayment days x 500 = 1000
   
   
4. Lastly, upload the result in your current/upcoming payroll via One-Time Adjustment, you may use Basic Salary or Salary Adjustment as the Adjustment Types. Here's how: How to Set Up a One-Time Adjustment for a Specific Employee / How to Set Up a One-Time Adjustment using Mass Upload (Excel File)
   
   Note: Since this is a deduction, the amounts should be in a negative value.