What is a payroll?
Payroll is a document in which the company includes all the information on wages for employees – it is primarily a confirmation of the settlement of wages.
Important!
Payroll can only be applied to contracted employees. If the company also employs on the basis of a contract of mandate or contract for work, the basis for payment of wages for these employees, will be the bills.
Preparation of payroll requires the entrepreneur to have the appropriate documents, which include:
- employment contract,
- time record card (it is in it that you will find information about overtime, night work, as well as Sundays and holidays),
- attendance list,
- labor certificates confirming the fact that the employee was employed at previous jobs,
- PIT-2 statement,
- Information on bonuses to which the employee is entitled.
Although in the past payrolls were created in paper form, nowadays companies most often maintain electronic versions of payrolls – usually in spreadsheet form, although special applications for preparing and updating payrolls and other documents are also becoming increasingly popular.
In what situations should a correction be made, and when is it not necessary?
Sick leave provided after payment of wages
One of the most common cases in which a payroll adjustment is required is when an employee provides the company with sick leave after he has already been paid for the period in question. This can happen, for example, if the salary for a given month is paid at the end of the month (for example, every 25th of the month), and the release is issued after that date.
EXAMPLE
Mr. Xavier received his salary on March 25. A day later, he was involved in an accident, which put him in the hospital for an extended period of time. He did not send the sick leave to the company until May, but it included the last few days of March in its date range. In such a situation, his employer will have to make a payroll adjustment, since he has already paid the employee for the days for which the employee will receive money from the Social Security Administration.
Absence of an employee for more than 30 days
When else will a correction be necessary? Whenever an employee’s absence due to long-term illness or convalescence lasts more than 30 days. It’s worth remembering that in addition to the payroll, you should also make the appropriate corrections in all settlement documents – if these have already reached Social Security.
Important!
If Mr. Xavier’s absence had been shorter, a payroll adjustment would not have been required, as the employer could have compensated the salary issue in the next pay period. However, since the next payroll period has already passed, the parties can’t simply agree to equalize the amount – a payroll adjustment is required.
However, let’s check with an example what a similar situation would look like:
EXAMPLE
Ms. Iwona also received her salary on March 25. Two days before the end of the month, she fell ill and went on sick leave. She returned to work after three weeks.
Although the employer previously paid her for the entire month, she does not have to make a payroll adjustment. Moreover, it is also not obliged to inform the employee that it intends to pay her salary for the month of April, minus the overpayment that arose in March. Of course, for the sake of maintaining correct relations, it is worthwhile for him to do so, nevertheless no regulation requires it.
The above words are confirmed by the Supreme Court ruling of October 14, 1997. – click to read it!
Payroll adjustment – return of overpayment in wages
Keep in mind, however, that the above situation only applies to absences due to illness or convalescence after an accident. If an employer has paid an employee more than the salary due, for example, as a result of a mistake, the employer can ask the employee to return the excess, but then the employee is not under any obligation to give the money back. In such a situation, it may become necessary to take legal action.
However, this is an unlikely scenario – an employee who insists on keeping the surplus received has little chance of winning in court (most likely, the Civil Code’s provisions on unjust enrichment will apply), and once relations are damaged in this way, it will not be easy to improve. However, this does not change the fact that it is the responsibility of the employer to pay wages at the appropriate rate.
Payroll adjustment and income tax – what are the consequences?
In the above situation – if the parties decide to settle the matter amicably – the employee will return the excess salary to the company’s account. However, this requires further steps on the part of the entrepreneur:
- the reimbursed amount must be deducted from the employee’s income,
- the previously collected advance income tax should also be deducted,
- The employer must correct the billing documents,
- The overpayment of Social Security contributions resulting from the situation must be added to the employee’s income.
Important!
The overpayment can be settled in parts over successive months – this may become necessary if the employee’s income proves too low to deduct the full amount of the overpayment.
Payroll adjustment – return of underpayment in wages
There are also reverse situations, in which the employer pays less than what is due under the contract. In this case, the employer should take the following steps:
- Immediately pay the missing amount so as to equalize wages,
- add statutory interest on late payment to the amount sent – it is worth remembering that this interest is free of income tax,
- make advance payments for income tax and Social Security contributions on the amount paid.
Important!
Art. 55 ź1.1 of the Labor Code explicitly states that an employee may terminate an employment contract in accordance with the procedure specified in §1 also if the employer has committed a grave breach of fundamental obligations to the employee; in such a case, the employee is entitled to compensation in the amount of wages for the notice period.
There is no doubt that paying less than the salary due constitutes a grave breach of the employer’s basic duties to the employee
Accident at work – judgment arising after payment of wages
This is one of the cases in which the entrepreneur may be required to make a surcharge on the employee’s account – this is because the employee is entitled to a benefit of 100% for an accident at work.
Thus, if the employee first receives a salary that takes into account the Social Security settlement (as if he were on ordinary sick leave), it will be necessary to make a payroll adjustment and make an equalization transfer in the amount representing the difference between the paid and due benefits or salary.
Important!
Ms. Marta suffered a traffic accident on her way to work, but due to a mistake, the accident was not initially classified as such. Thus, the employer paid Ms. Marta a salary of 80%, instead of the benefit she was entitled to, which was 100% of her salary. The correct ruling from the Social Security Administration arrived at the employer after several weeks, and a payroll adjustment is needed.
How to make a payroll adjustment?
Depending on what the reason for the need for an adjustment is, the course of the adjustment will be different. However, the entrepreneur must take into account every element of the list, starting with the basis for sickness and accident insurance contributions, through all employee and employer contributions, to a detailed breakdown of the differences between underpayment and overpayment.
Payroll adjustment – an example
The company employing Mr. Janusz mistakenly failed to pay the pension and disability insurance contributions due. This happened only once, in 2018, but the matter only came to light a few years later, during an audit conducted at the company by Social Security. This is a rare, though possible, example in which payroll will need to be adjusted after a Social Security audit.
In such a case, a peculiar situation arises – for the underpayment of pension contributions occurs on the part of both the employee and the employer. Even more confusing is the fact that the parallel effect of not charging premiums (in this one month only!) is the creation of an overpayment of health insurance premiums.
Where did the overpayment come from? Mr. Janusz’s income is the basis for Social Security contributions. A lower-than-usual amount of health insurance premiums was collected from this base. As a result, a higher-than-necessary health premium was paid.
The proper procedure in such an arrangement is to summarize all underpayments and overpayments and compare them with each other. This, however, has further implications – this time regarding income tax. Since the health premium was overpaid by the employee (he incurred the cost), the employer should reimburse it to the employee. The problem is that part of the contribution was tax-deductible – we are talking about the amount of PLN 226.13 (Mr. Janusz’s salary was net PLN 7,100). All these elements finally lead to a conclusion – when Mr. Janusz receives an overpaid contribution from his employer, he will have to note this fact in his annual return for the year in which he received the refund.
The proper handling of such a situation is governed by regulations, specifically Art. 45, para. 3a(1) of the Personal Income Tax Law:
“If a taxpayer, calculating the tax due, has made deductions from income, the basis of computation of tax or tax, and then received a refund of the deducted amounts (in whole or in part), in the tax return filed for the tax year in which he received this refund, he shall add accordingly the amounts previously deducted.”
In order to make the correct adjustment, the employee will therefore have to put the amount of PLN 226.13 in the tax addition item.
