How to repay an employee when the payment is rejected by the bank

Modified on Thu, 5 Mar at 12:33 AM

Summary

This article explains how to reprocess a pay when it is rejected by the bank. Typical rejection reasons include typographical errors with new employee details, and employees closing accounts without advising payroll.

End Result

The Employee will be repaid without it affecting their STP YTD figures.

Method

After you have confirmed the correct banking details with the employee, there are two options to resolve the issue.

Option 1:

Create a Special Pay for the employee, to reverse the initial pay. You will need to mark this is not required for STP.
To do this go to Current Pay Maintenance > Summary Tab > Change Payroll Summary > Un-tick Single Touch payroll Enabled > Select Yes on confirmation screen and enter reason.
Finalise and close of the Negative Pay
Ensure bank details are updated
Create another special Pay - Again mark as not required for STP and process the pay again with the positive amount, close off and use the new EFT file from the finalisation to pay the employee.

Option 2:

Create a new Special pay for the same amounts as the previous pay.
Ensure Bank details have been updated
Finalise the Pay as far as creating the EFT file - DO NOT CLOSE OFF THE PAY OR PROCESS THE STP
Use the new EFT file to pay the employee
Cancel the Finalise process and delete the pay

Both of these options leave the YTD figures with the ATO correct as at the last STP transmission. For auditing purposes Option 1 probably is better as it keeps a record of the ins/out of the money and why however Option 2 is probably easier, but it will look a little messy on the bank rec as far as reconciling the additional EFT amount to the original payroll.