Original Content: Business Upside
Being the owner of a company, it is your responsibility to ensure that every employee gets his correct due and on time. But dealing with payroll mistakes is not unheard of in organizations. Let us say, if you have underpaid one of your employees during the pay period, you must pay them the due in form of retro pay. Let us find out more about it in detail below.
What is Retro Pay?
The short form for retroactive pay is known as retro pay. If an employer was not paid his due correctly at any point of time in his previous pay period since the calculation was done incorrectly on his paycheck, the employer is entitled to get this retro payment. Retro pay meaning implies that you are paying the employee the difference between what he is supposed to get and what you have paid. And you must include this payment in his next paycheck.
Now that you are familiar with what does retro payment mean, let us get into the finer aspects of the same.
You will find that retro payment is not common for small businesses, nevertheless, it may happen. However, you must make sure that too many pay periods must not have passed since the calculation was done incorrectly and the wrong payment disbursed. The moment you discover the discrepancy, the retro pay must be promptly added to the next paycheck.
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