Update pay rates, including backdated changes

Pay Rate Changes gives you one process for increasing pay rates, whether for one person or a whole pay group, and automatically works out any backpay owed when a change is backdated.

This guide explains how to create, review and process a pay rate change. Please read the full guide before processing your first backdated change.

Pay rate changes provides you with a structured, auditable way to update employee pay rates in bulk. It enables payroll administrators to prepare, review and process pay rate changes before they are applied, while automatically identifying where backpay may be required.

Whether a pay rate change is created manually, generated from an approved Pay Review, or initiated through Employee Payments, all pay rate changes follow the same review and processing workflow. This provides a consistent experience regardless of how the change originated.

When a pay rate change has an effective date in a previously closed pay period, Smartly automatically determines whether backpay is required. Where applicable, backpay is calculated and included in the next pay run once the pay rate change has been processed.

When you will use a pay rate change:

• Applying annual remuneration increases across multiple employees.
• Processing pay increases resulting from performance or remuneration reviews.
• Correcting historical pay rates where an employee should have been paid at a different rate.
• Applying future-dated pay rate changes ready for an upcoming pay period.

Terminology

Batch - A Pay Rate Change is processed as a batch containing one or more employees from the same pay group.

Effective Date - The date the employee's new pay rate takes effect. This determines whether backpay may be required.

Backpay - Additional earnings calculated when a pay rate change takes effect in a previously closed pay period.

Pay Group - Each Pay Rate Change belongs to a single pay group. Separate batches are created for employees in different pay groups.

Employee Status - Each employee progresses through a series of statuses (such as Incomplete, Action Required and Ready to Process) as the batch is prepared.

Batch Status - The Pay Rate Change itself progresses through statuses as it moves from preparation through to completion.

User Roles

Access to Pay Rate Changes depends on both your payroll role and your pay group access.

To create or complete Manual and Employee Payments Pay Rate Changes, you must have the Day To Day Processing payroll role.

A typical Pay Rate change

1. Receive or create a Pay Rate Change
2. Prepare the Pay Rate Change (as required)
3. Review the Pay Rate Change
4. Complete the Pay Rate Change
5. Back pay included in the next pay run (as required)
6. Pay Rate Change moved to History.

A pay rate change can start three ways: Manually (most common); through Employee Payments, which can trigger a Backpay required prompt with the choice to Save without backpay (no record created) or Create backpay (creates one for review); or through an approved Pay Review (People Management Users only), which creates one automatically for payroll to check.

To create one manually: click New pay change, name the batch, select the pay group, then Create. (One pay group per batch — a Pay Review approved across several pay groups splits into a separate batch per group automatically.)

1. Go to Pay > Pay Rate Changes.

Switch between Active and History using the tabs at the top. (A warning icon beside a batch means its Total Backpay figure is incomplete or out of date — opening the batch recalculates it automatically, so this isn't something you need to fix manually.)

2. Click New pay change to start one manually.

3. Click Add employees, tick who to include, then Add — they're auto-selected, ready for a bulk update.

4. For a shared increase: select everyone affected, Action > Set date and rate, enter the effective date and rate, then Apply. You can also use Action > Delete employees to remove people from the batch before processing.

5. Update anyone needing a different date or rate individually. Effective date can't be earlier than the employee's start date.

Most employees move straight to Ready to Process.

Action Required most commonly means a change is backdated part-way through a pay period that's already been paid, and Smartly needs help working out how much of it to include.

1. Click the chevron (>) on the employee's row to open their Backpay Breakdown.

2. Review the affected pay period and enter the Included Duration.

3. Click Save.

Note: until an Included Duration is entered, the affected period is excluded from the backpay figure — so the number shown will typically increase once it's filled in, not decrease. Use the Backpay Breakdown, or the Backpay Calculation Detail report from Report Generator, to check the calculation before processing.

Once everyone shows Ready to Process, click Approve & Process (shown as Process if the batch came from Employee Payments or Pay Reviews, since those are already approved).

• No one needs backpay: rates update immediately and the batch moves straight to Completed and History.
• Backpay is owed: rates update immediately; the batch sits in Processed status until the backpay is actually paid in a pay run. It's added to the first pay packet created after processing, as a separate earning, taxed as extra pay per Inland Revenue requirements.

Note: a processed change can't be edited. You can still remove an employee before their backpay is paid — this cancels the outstanding backpay but does not revert the rate already applied; correct the rate via the employee's Payments tab if needed.

To pay backpay separately from normal pay, create the Manual Pay before the next Normal Pay — it lands in whichever pay packet is created first and can't be pulled back out.

• This is Pay Rate Changes — "Backpay Calculator" describes the underlying calculation, not the feature name.
• No documented guidance yet on how backpay interacts with leave, holiday pay, KiwiSaver or deductions.
• Backpay shows as a separate earning on payslips, the Payroll Register report, and as a One Off Payment in exports including to Xero.
• Once processed, a batch can't be edited or deleted. You can still delete an entire batch before processing — a manually-created one while it's In Review, or one from Employee Payments while it's Approved — or once it's empty (all employees removed), from the Pay Rate Changes list.

The backpay figure looks too low. Check whether the employee shows Action Required — until an Included Duration is entered for the affected pay period, it's excluded, so the figure increases once filled in.

A rate change through Employee Payments didn't create any backpay. At the Backpay required prompt, Save without backpay saves the new rate immediately without creating a record or calculating backpay — if backpay was expected, re-enter the change and choose Create backpay instead.

An employee won't appear in Add employees. Check whether they belong to the selected pay group, are already in another active pay rate change or an active Pay Review, or are mid-termination or already terminated — any of these can keep them off the list or make them unselectable.

A batch can't be edited. Once processed, a batch is permanently read-only. Before that, editing can also be blocked if you only have read-only payroll permissions, or if a pay run for the related pay group has already been processed and is awaiting authorisation.