Determining Whether to Reverse or Adjust a Check
This topic discusses how to determine whether to reverse or adjust a check and how to compare a reversal and adjustment.
Note: The system does not perform adjustments to online checks or manual checks.
Always process both reversals and adjustments using off-cycle payroll runs against an on-cycle pay calendar or a stand alone off-cycle calendar:
Initiate processing for both by setting up a run control for the check or checks that you want to reverse or adjust.
For a check reversal, select Reversal on the Reverse/Adjust Paychecks page.
For a check reversal and adjustment, select Reversal/Adjustment.
Run the Paycheck Reversal/Adjustment COBOL SQL process (PSPPYREV).
The Paycheck Reversal/Adjustment process produces different results, depending on whether you selected Reversal or Reversal/Adjustment for your run control.
We discuss both of these processes in greater detail in the following sections.
Use this rule for determining which run control to select:
If the check has not been cashed or deposited, run a reversal.
If the check has been cashed or deposited, run an adjustment.
When to Process a Reversal
A reversal is appropriate when you've produced a check that you subsequently realize should not have been produced at all, or should not have been produced how it was, and the check has not been cashed or deposited.
Examples:
An employee is terminated at the end of the last pay period and receives what should be her final paycheck.
However, the Human Resources department fails to enter her termination into the system. So, when paysheets are created and processed for the next pay period, the system produces a paycheck for her. Her supervisor reports to the Payroll department that she has been terminated, and that no check should have been produced. The Payroll department runs a reversal on her check, backing it out of the system.
An employee's check mistakenly didn't include overtime.
An employee's check mistakenly included overtime.
An employee wasn't paid at the right rate.
An employee was taxed in the wrong state.
If the paycheck has not been cashed or deposited in any of these situations, you destroy the check, run a reversal, and issue an on-demand or online check for the correct amount.
When to Process an Adjustment
If the paycheck is not available in any of the previous situations—if it's already been cashed, or if it was a direct deposit—you perform an adjustment.
Example: An employee should have been paid for 20 hours of overtime, but deposited his check before realizing the overtime was not on it. He requests his overtime pay.
The adjustment process calculates the check as it should have been calculated in the first place and compares the new calculation to the calculation for the original check. In the example of unpaid overtime, you issue a single check for the difference. In some cases the employee might owe the company money, in which case you process a negative adjustment.
Note: (CAN) When processing an adjustment, a Canada Pension Plan/Quebec Pension Plan pay period exemption may be applied in error to the adjustment cheque.
The Paycheck Reversal/Adjustment process produces different results, depending on whether you select Reversal or Reversal/Adjustment for your run control:
|
Field or Control |
Definition |
|---|---|
| Reversal |
Produces a negative image of the original pay record, with all the amounts changed from positive to negative. This effectively backs the check out of the system. |
| Adjustment |
Produces an off-cycle paysheet page with two pay lines: a Reversing Adjustment with a net pay of zero and an Adjustment record where you enter the information for the check as it should have been originally. |
When you reverse a check, you generally either cut a new on-demand check for the correct amount or do nothing after having reversed it (if that check shouldn't have been issued at all).
When you adjust a check, three situations are possible:
No change in net pay.
For example, an employee's pay is incorrectly charged to Department 10100 instead of Department 10010.
The company owes the employee money.
The original check is for too small an amount. For example, you pay an employee for 2 hours of overtime instead of 20 hours.
The employee owes the company money.
The original check was for too large an amount. For example, you pay an employee for 20 hours of overtime instead of 2 hours.
When you reverse or adjust checks, the following messages appear on the payline and paycheck records.
|
Field or Control |
Definition |
|---|---|
| Reversal |
Indicates that the check is a reversal. |
| Reversing Adjustment |
Indicates a pay earnings record that has been adjusted. It appears on the original pay earnings record. |
| Adjustment |
Indicates a pay earnings record that is created by the Reversal Processing process. It appears on the pay earnings record that is used to recalculate an employee's pay. |
| Adjustment − Partial Period |
Indicates that the employee with the adjusted pay earnings record has had a job record change, with an effective date that falls between the pay period begin and end dates prior to running the Reversal Processing process. |
| Adjustment − Pay Data Change |
Indicates that one or more of the employee's adjusted records has been updated since the last time paysheets were created or the pay calculation was run. The system recalculates such records during the next pay calculation if they have not already been recalculated. You may select all employees who have had a pay data change and must be recalculated by selecting Calculation Required in the Job Pay Data Change field of the By Payline - Payline search page. Entering Yes in the same field selects all employees whose pay has been recalculated due to a change in one of their pay-related records. |
| Adj − PayChg − Partl Period |
Indicates, for an employee who had an Adjustment − Pay Data Change message, that a change has been made to the job record, with an effective date falling between the pay period begin and end dates and it has already been recalculated. |