As an employer, it can feel good to provide employees with raises or bonuses. As mentioned above, employers make payroll adjustments for their employees because they want to reward an employee for exemplary work. Rewards are awarded to an employee for one purpose, and that is to motivate them to do better in the future.
- Alternatively, explore other means to retain valuable employees within your business, such as meaningful perks and benefits.
- According to the Bureau of Labor Statistics (BLS), the inflation rate was 8.5% in 2022 and 3.2% in 2023.
- You can also visualise all of the changes in one single view, as well as attach medical certificates to the corresponding payslip, for example.
- Check out our free downloadable guide to learn what the FLSA does and doesn’t require, get an overview of other labor laws, and more.
- As businesses gain momentum in 2024, many employers wonder how inflation will impact pay raises for staff – how will it affect what they can afford and what employees need?
Pay deductions from government-mandated benefits such as social security and healthcare. And if you prefer, you can even give you payroll agency access to the system so that they can download the information themselves. When someone joins the company, we need to register them and prepare a contract. This adjustment can be resolved (almost) automatically so that the new joiner can sign on their first day.
Consistent Pay Raises Can Help Keep Employees
Making hand-written notes or using a document on goodwill definition an individual computer is risky. We may often make mistakes when writing down a number, or we may even forget to make adjustments in time for the employee to receive them. It creates extra work for us by having to go back and correct payslips. You must also follow the rules for determining between exempt and nonexempt employees.
Make sure you’re in line with the Fair Labor Standards Act, which outlines federal requirements for overtime pay, recordkeeping, minimum wage and other standards. For instance, if you’re giving an employee a book value raise, their salary increase may be based on a percentage. You can use research past raises and industry standards to help you decide what you should do. Extra payments must also be shown on the employee’s payslip to reflect that the company is paying them more money that month.
Listed below are the steps on how to make a Payroll Adjustment Form for all payroll adjustment needs. We look into the most common payroll adjustments and how a customised HR software can make your life easier. Whatever your reason is to adjust an employee’s pay, make sure it is well defined.
Ensure Compliance with Unions, Contracts, and Regulations
Modern payroll software leverages payroll automation to reduce the need for human intervention in payroll, including the management of payroll changes. Even for employees who earn a fixed salary, the payment amount detailed on the payslip may change from time to time. Whenever an employee is paid more (or less) than their usual earnings, a payroll adjustment is needed. Payroll adjustment software is by far the best way to manage these tasks. These systems enable you to record and store all information automatically, which helps the HR team closely monitor processes and with greater accuracy.
How to manage payroll adjustments?
Also make sure to communicate pay and payroll adjustments with the appropriate leadership and supervisors in advance of any changes. Some changes in benefits can necessitate a compensation adjustment. This can be a gross-up adjustment, for example, to cover the income and payroll taxes owed on the benefit. Positive adjustments, like overtime, bonuses, and raises, are more common. That said, you may have times accounting profits vs. firm cash flow when you need to reduce pay if an employee takes unpaid time off or receives a demotion.
And, if you have the right software, it can be pretty automatic. But, sometimes, you have to make changes to payroll, such as when you hire a new employee or give someone a raise. Learn how to use a liability adjustment to correct employees’ year-to-date (YTD) or quarter-to-date (QTD) payroll info in QuickBooks Desktop Payroll. “At this point, giving employees a raise to offset inflation may be too little, too late,” noted Dalgliesh.