When a payslip is incorrect and fails to account for the work done by you, a process known as back pay is used to amend this error. Back Pay is the amount that is owed to you after you have been underpaid during a previous pay cycle. It is important for you to understand what back pay is so that you can claim it when appropriate to ensure that you receive the amount of pay that you are entitled to. This article will explain the process behind back pay payments, when a graduate is entitled to it, and how to complete the calculations to determine the amount that is owed.

What is Back Pay?

Back pay is the difference between the amount of money you received for a pay cycle and how much you should have received for the work that you completed. This amount is then owed to you by your employer. An employer can then use back pay to provide you with the money that is owed to you. You may be entitled to back pay for several reasons, including untaken annual leave, bonuses, and commissions. These circumstances result in your being entitled to more money in addition to your salary amount. If you believe that you are entitled to back pay, it is important you discuss this with your employer as soon as possible. This can allow for the efficient resolution of the issue, to not only provide you with what you are entitled to but to correct the balance of the company’s finances. Note down the amount that you are owed and the reason for this. You will then be able to receive the amount that is owed to you in your next pay cycle, or upon a date determined by your employer. 

How is Back Pay calculated?

The Human Resources department of a company or organisation is responsible for calculating the back pay payment that an employee is entitled to. This process of calculation can take some time as it may require consultation with your employer. It will also depend on the relevant paperwork and the payroll system’s processes. 

You can also calculate back pay yourself. Simply subtract the amount that you should have received from the amount that you did receive. This will provide you with the difference in pay that is owed to you.

What documentation do I need to claim back pay?

It is appropriate to have supporting documentation when approaching your workplace with a back pay claim. This can help speed up the process of providing you with the back pay. Supporting documentation can include the following:

• Pay slip
• Timesheet
• Employee contract
• Overtime confirmation
• Bonus confirmation
• Bank statement

When is Back Pay given?

An employee may be entitled to back pay for one of many reasons. Here is a list of the most common reasons for why you may be entitled to back pay:

Incorrect Wages

You may be entitled to back pay if you have received the incorrect wages due to a miscalculation of the hours you worked during the pay cycle. This is particularly likely when an employee is responsible for completing and submitting their own timesheets, resulting in an increased likelihood of errors. This can be easily corrected by the Human Resources department after you have communicated the issue to them. 

Minimum Wage

If you are receiving payments that are below the allowable minimum wage, as outlined by the Fair Work Commission,then you are entitled to back pay. At times, you may not realise this discrepancy until after you have calculated your annual salary and compared the amount to your hourly rate. In this instance, the employee is entitled to be paid back pay for the underpayment they received during the entirety of the contractual period. 

Wage Deduction

You may notice that your wages may have been deducted during a particular pay cycle. This may be for a variety of reasons, including overpaid wages, taxes, damages, or uniform costs. If you believe that you do not satisfy any of the reasons for wage deduction then you should communicate this with your employer to receive back pay. 

Incomplete Work

If you were unable to complete your work, through no fault of your own, you may be entitled to back pay. This situation arises when you are prevented from finishing your work for reasons that were out of your control. This can include a workplace accident or an unlawfully terminated contract. 

Entitlement to Bonuses

You may have been promised a bonus which is then not reflected in your pay slip. While this may simply be an oversight due to miscommunication, you should raise this issue with your manager to ensure that they directly communicate this request to the payroll team. 

Unrecorded Overtime

If you have worked overtime, you may be entitled to back pay if the additional hours for the pay cycle were not accurately recorded meaning that you were not paid the correct wages for the time that you worked. This may occur simply because the Human Resources department was not notified of the fact that you had worked additional hours or the information was accidentally excluded from your timesheet from the pay cycle. To avoid this oversight, it may be helpful to check with the HR department before the payslip is calculated for the pay cycle whether the overtime has been considered.

Unpaid Leave

You may be entitled to back pay for personal leave that you did not take. This may be a simple oversight or miscommunication between departments so ensure that you communicate the error as soon as you notice it.

Pay Rise

If you received a pay rise, during the first pay cycle after this increase, this may not be accurately reflected in your pay slip. You should communicate this to the Human Resources department so that they can provide you with back pay and amend their records so that you receive the correct amount in future pay cycles.

When can Back Pay be withheld?

Back pay can only be withheld under certain conditions. This can include a situation that is covered by your contractual agreement, by law, by your industry award, or if you have given written permission to this effect. For instance, you may give permission to your employer to withhold back pay to make up for a time where you were accidentally overpaid.

How to resolve a back pay dispute?

If your employer refuses to provide back pay and you believe that you are entitled to it, you can contact your union, the Fair Work Ombudsman or the Australian Taxation Office. These entities can provide you with advice depending on the circumstances of your situation so that you can resolve the dispute.