Overview of Retroactive Pay

Retroactive pay, also referred to as retropay, is the recalculation of prior payroll results when changes effective in prior payrolls are updated after the original payroll calculation.

For example, when time cards are submitted after the cutoff, or an employee receives a performance bonus for a past pay period.

Use the Recalculate Payroll for Retroactive Changes process (retropay process) to calculate retroactive pay changes.

When you run the retropay process, it recalculates the employees' previous payroll periods, based on the unprocessed notifications raised. Although you recalculate all periods that have retroactive changes when you run the retroactive process, it doesn't modify the original stored results for these periods. It doesn't override historical payroll data. Instead, it creates a new set of results to use to compare against the original results. When it finds a difference between the original period results and the newly calculated retroactive period results, the newly calculated result is stored in the retroactive element in the current period. When you run the Calculate Payroll process for the current period, the newly created retroactive entries are included.

Elements Included in Retroactive Pay

It's important to decide when to enable an element for retropay. When you create your elements using the element template, enable the element to be subject to retroactive changes and select the retro event group. The retropay process includes these enabled elements in its calculations.

Note: You can always configure elements to be used by retropay and later decide not to configure the retroactive components so the element isn't included in the retropay process. Use the Elements Page to configure retroactive components. To process an element in a retroactive payroll run, the element must have retroactive components that define the processing rules.

Event Groups for Retroactive Pay

Define types of changes in your retroactive event group to trigger events and retroactive event notifications. It is recommended you use the predefined Entry Changes for Retro event group to track retroactive changes to element entries and assignment details such as location. Associate the event group all elements that are subject to retroactive changes. You also have the option to configure your own event group of type retroactive.

Event Notifications for Retroactive Pay

Retroactive event notifications are used to identify which employees to include in the retropay process. Employees with a retroactive event notifications status of Awaiting Processing are included. When the employee is processed in retropay, the status of the retroactive event notification is changed to Processed.

When a retroactive event is triggered for an employee, such as a backdated salary award, the employee is automatically evaluated for a retroactive event notification and the following occurs:

If the employee doesn't have an existing and unprocessed retroactive event notification, a new retroactive event notification is generated. The Process Date of the notification is set to the event date, such as the date of the salary award.
If the employee has an existing and unprocessed retroactive event notification, the Process Date of the notification may be updated. For example, an employee is granted a backdated salary award effective 05-MAR. This event triggers the creation of a retroactive event notification, with a process date of 05-MAR. Subsequently, a job change is entered for the employee effective 01-FEB. The job change event triggers the re-evaluation of the unprocessed retroactive event notification and the process date will be updated to 01-FEB. This ensures retropay recalculates all of the employee's payrolls from February to the current payroll period.

Note: You can create a retroactive event notification manually to have the employee included in the retropay process.

The Process Date, or Override Date if available, on the retroactive event notification controls how far back the retroactive payroll process recalculates payroll for the employee. Consider these points regarding the retroactive payroll process:

You can enter an override date on the Retroactive Events page for event notifications that have an Awaiting Processing status.
Retropay calculates from beginning to end of a pay period and not for partial pay periods. For example, if a monthly paid employee has an unprocessed retroactive event notification with a Process Date of 10-SEP-21, retropay recalculates the September 2021 payroll run and all subsequent payroll runs.
When the event notification is processed, the override date is used to determine the start date of the retroactive period for the employee.
You can control the number of payroll periods you include in the retropay process by setting the earliest start date for the process. For example, When you set an override date for your employee, it is used as the start date for the retropay period. The override date entered in the employee’s retroactive notification takes precedence over start dates defined using the Earliest Retroactive Processing Date parameter and the Number of months in rolling period for retroactive changes parameter.
You can set the start date of the retroactive period to an earlier or later date than the process date of the retroactive event notification. For example, the process date is 10-Oct-2021 and 4-Sep-2021 is entered as the override date for an employee on a monthly payroll. Retropay continues to pick up elements for the entire pay period, which is 1-Sep-2021 to 30-Sep-2021, recalculate the September payroll run and all subsequent runs.
You can search for Retroactive Notifications with an existing Override Date from the Event Notification page.

Retroactive Pay Process Tasks

Use these payroll processes and reports to calculate retroactive pay and analyze the results.

Whether creating a flow pattern for retroactive related tasks, incorporating tasks into a payroll cycle flow pattern, or running individual processes it's advised to run them in the following order:

Task Name	Flow Pattern	Description
Run Retroactive Notifications Report	RETROACTIVE_NOTIFICATION_REPORT	Submit this report to view notifications for retroactive payroll events and the details of the changes that caused the events. This report highlights the notifications that are outstanding and will be processed by the retroactive pay process.
Recalculate Payroll for Retroactive Changes	RETROACTIVE_PAY	Submit this process to calculate retrospective changes that weren't included in the original payroll run. This is the key retroactive pay process that compares prior payroll periods and creates the retroactive entries. You can run with a payroll relationship group to restrict who's processed in this task. Otherwise, the process runs for all. Note: When submitting the Recalculate Payroll for Retroactive Changes process enter your relationship group in the payroll relationship group parameter.
Recalculate Payroll for Retroactive Changes	Evaluate Late Hires	Submit this process to automatically evaluate late hires, create a net pay result, and create retro event notifications. This lets the late hires to be processed within the Recalculate Payroll for Retroactive Changes process. This flow pattern contains two tasks, Calculate Payroll for Late Hire and Late Hire Retropay Notification. These tasks replace the need to manually enter an element entry against the late hire, as the Late Hire Retropay Notification task automatically creates the notification.
Recalculate Payroll for Retroactive Changes Single Employee	RECALCULATE_PAYROLL_FOR_RETROACTIVE_CHANGES_SINGLE_EMPLOYEE	Submit this process to calculate retrospective changes that weren't included in the original payroll run for a single employee. This performs the same calculations as the Recalculate Payroll for Retroactive Changes process but for a single employee.
Run Retroactive Entries Report	RETROACTIVE_ENTRIES_REPORT	Submit this report to view retroactive entries details and the corresponding original calculation results that were compared to trigger the retroactive entry. This report highlights the retroactive entries created by the retroactive process. It also identifies the creator type of Retroactive Pay Element Entry or Retroactive Pay Run Result.
Run Calculate Payroll	Missing Flow Pattern System Name	Submit this process to calculate your payroll.
Calculate Retroactive Costing	RETRO_COSTING	Submit a process to recalculate costs for retroactive changes to costing setups.

Considerations

Things to consider when you run retroactive pay:

It's important to always run your retroactive pay process as close to your calculate payroll process run. And, for greatest accuracy, run it as close to the cut-off date as possible, which is the point when all your data entry for the payroll is complete.

Note: If you run the retroactive pay process after the payroll process, the retroactive adjustments are held over until the next payroll period.
If you run your payroll and then discover you have additional backdated adjustments, you can wait until a later payroll period and run the retroactive pay process for that subsequent payroll period.

Note: If you choose to process them in the current period you must make the changes, run an additional retroactive pay process with a process date equal to or later than the payroll run process date. Once the retroactive elements are created, you must process the employees in a subsequent payroll run or QuickPay. In this scenario, it's important the element processing rule be set against the element is final close date.