Negative net pay - Sage 50 payroll

What is the correct way to process a negative net pay (recovery from leaving employee) ?

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Employee leaves in April 2017's payroll run. Had overutilised holidays, so were shown as negative payments for recovery.

Tax refund - 50% of the negative pay (not clear why, but thats what Sage has calculated). So the net pay is half of the amount recoverable.

Now Sage doesn't allow FPS because of the negative net pay.

Should i just put a post tax payment to arrive at NIL pay and proceed with the FPS? Or will this have issues somewhere?

Should the guy's P45 and payslip show the negative net pay and tax?

Replies (16)

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By tom123
01st May 2017 08:31

What is the employee aware of / expecting?

I would have thought that the maximum possible is to explain to the employee that he is going to get nothing.

How many days did he work in April for no pay?

Presumably your contract of employment contains these clauses? They are not 'implied' if not there.

So, eg Days worked 3, holiday taken 4, gross pay nil.

Nothing to process on payroll.

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Tom McClelland
By TomMcClelland
01st May 2017 08:51

What are you going to do about the fact that the employee owes the employer money? That will inform your decision about how to handle this situation in the payroll.

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By Binson
01st May 2017 09:05

Last day 7th April
5 days pay for April
-9 days excess holidays

the employer wishes to recover the excess holidays, after considering the tax and NI on it. So the negative figure has been processed.

Should i not show the excess holidays in the payslip?

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Replying to Binson:
By johngroganjga
01st May 2017 09:11

You don't seem to have read the helpful responses you have already received. What the employer "wishes to" do is neither here nor there. As has already been pointed out, it's either what the contract provides, or what the employee agrees to do. You have not responded to either of those points.

Thanks (1)
Replying to Binson:
Tom McClelland
By TomMcClelland
01st May 2017 09:24

If the employer has received a payment from the employee of the negative net that the employee owes them then indicate that as a post-tax payment on the payslip.

If the employee isn't going to be made to do that then the employer is effectively paying the employee whatever gross is necessary to bring their net pay back to zero (bearing in mind that their final payslip may have an additional week/month of free pay), and that amount should be calculated as a pre-tax payment in my opinion. I don't think that the employer can just "gift" the employee the negative net without consequence as that would involve misreporting to HMRC what the employee has actually received.

Thanks (1)
Replying to TomMcClelland:
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By Binson
01st May 2017 10:24

Thanks.

Yes, the employee will pay the amount that the employer specifies.

Sage warning says - taxable/NI'able pay cannot be less than zero. Hence, adding a post-tax payment didn't help.

Please note that the FPS does go through if i click on 'continue' and proceed. But will it be wrong to update HMRC's records with -ve pay and -ve tax?

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Replying to Binson:
Tom McClelland
By TomMcClelland
01st May 2017 10:35

That is a warning only. Just proceed, as negative gross pay is exactly what has happened in this case, so it is correct to report it as such on the FPS.

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Replying to TomMcClelland:
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By tom123
01st May 2017 18:16

Not sure if your reasoning is correct:

Consider an adjustment to hourly pay:

Week 1 - 9 hours worked - ten hours paid in error.
Week 2 - 9 hours worked - eight hours paid - to correct the error.

In my example, I would adjust the gross to eight hours, rather than pay the nine, and collect the net difference.

Surely, in this case, more holiday has been taken than earned in prior months - so you just adjust the gross in the final pay to nil.

The employee has already been 'paid' and taxed on the excess when it was taken.

No need to add additional gross pay only to tax it back to zero.

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Replying to tom123:
Tom McClelland
By TomMcClelland
01st May 2017 19:10

That is another possible treatment, but it didn't seem to be the way the OP was going with it.

The point I was making rather clumsily was that if you process pay such that net pay is negative you shouldn't file that without actually recovering the payment. I probably over-complicated it.

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Replying to TomMcClelland:
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By tom123
01st May 2017 19:23

Yes, I see where you were going with that.

Personally, I aim in these situations to reach a fair conclusion, which would usually be nothing owed.

To pursue for a further repayment would strike me as vindictive in most cases - although one can sometimes end up with 'bad' leavers, we prefer to try and ensure the employment relationships end with a modicum of goodwill if possible.

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RLI
By lionofludesch
01st May 2017 10:48

Is there not some ACAS ruling that prevents employers from recovering overpaid holiday pay or did I dream this ?

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Replying to lionofludesch:
Tom McClelland
By TomMcClelland
01st May 2017 10:57

Not if the employee consents to the recovery, or if the recovery is specified in their contract.

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By Chris Pittock
09th May 2017 17:09

I think the situation is:
a) His salary for 7th April is Zero. Don't do a negative salary in a new year
b) Over his employment you have overpaid him, that is the employer's fault
c) If the employer is able to recover some money for this he can only expect a recovery of the Net over payment from the employee

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By grinch55
27th May 2017 01:10

Can anyone tell me why I have neg net on my payslip, wages showing , a deduction for un paid leave, but total paid this month is nil? It shows wages of gross £796.21, taxable pay £752.42, no ni or tax, pension conts of £43.79 ON YEAR Tto date, hasn't added on last months and total pay is nothing? I am still employed there, itis a school that has just transferred to an academy

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Replying to grinch55:
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By tom123
27th May 2017 08:37

/sounds like a [***]-up all round to be honest. You will need to speak to whoever now does your HR in the first instance.

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Replying to grinch55:
RLI
By lionofludesch
27th May 2017 08:48

Perhaps you're not still employed there. Maybe you've left and been re-employed by the Academy.

But you still need to ask the HR dept what they're playing at.

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