How do I calculate and pay back pays?


The aim of this article is to explain how to calculate and enter a back pay in Sage WageEasy when there has been a back dated pay rise.


Processing Back Pays.

PurposeThe aim of this article is to explain how to calculate and enter a back pay in Sage WageEasy when there has been a back dated pay rise.

To calculate the amount of the back pay:

  • First, calculate the percentage of the increase so you can calculate the amount of back pay that is owed to the employee. You will need to divide the new pay rate by the old and then multiply this by 100 to get the increase as a percentage.


Example: If Anna is currently paid $10.50 per hour and the new rate is $11.75



Therefore, Anna’s rate has increased by 11.9%. (To check this calculation $10.50 x 111.9% = $11.75)

o Generally, all pay rates (full time, Saturday, Sunday, overtime etc.) will increase by this percentage, as in most cases every pay rate is relative to the full-time weekday pay rate.

o You may wish to take 2-4 common rates and check them to ensure you come up with the same percentage. You will sometimes find that each pay rate increases by a different percentage.


  • Look at the gross over the pay weeks since the pay rise was approved. Do this under Reports > Employee > Payment Summary, or Reports > Payment Summary, selecting the required dates, for all employees.
  • Once you know the total gross, multiply this by the percentage rate of the increase to give you the amount of the back pay.

To process back pay in Sage WageEasy:

  • When processing the normal pay at Wages > Timesheet enter the pay for the current period as normal.
  • Select Next to go to Adjustments. Choose Allowances and Add.

(Alternatively, if the back pay is a large amount use the Lump Sum Payment Wizard via Adjustments. Choose Lump Sum and Add. Follow the prompts in each screen of the wizard.)

o In the New Allowance wizard, if there is not an allowance called Back Pay, please add this new allowance:

• Make it a standard allowance.

• Call it Back Pay.

• Type Addition.

• Frequency Each Pay.

• Tick the Taxed and Include in Super Calculation boxes. For backpay of overtime, the Include in Super Calculation box should not be ticked.

• Leave the amount blank.

• Choose Next. If you use you General Ledger, set up the codes here. Otherwise click Next.

  • You can let Wage Easy calculate the tax, but if you wish to make an alteration, you can do it in the Adjustments screen under Tax before saving the pay slip.

NOTE: If the back pay dates back to more than 12 months before payment date, that portion of the back pay needs to be entered as LUMP SUM E on the Employee Details > Payments > ATO Summaries screen. This value will print as a Lump Sum E on the payment summary / STP Reportiong and NOT Gross Payments.

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