Payroll
Issue a penalty and deduct it from salary
Record a disciplinary penalty as a fixed amount, days of salary or a percentage, approve it, and let the next payroll run deduct it once.
3 min readLast updated
In this article
A penalty is a disciplinary deduction from an employee's salary. You issue it on this screen, or an attendance policy rule creates it for you. It reaches the payslip only after someone approves it, and the payroll run deducts it once.
A penalty has three statuses:
Pending: issued and waiting for approval. Payroll does not deduct it.
Applied: approved. The next payroll run deducts it, and the status then shows that it was deducted in payroll.
Cancelled: it will never be deducted.
Issue a penalty
Open People › Payroll › Penalties and select Issue Penalty.
Choose the Employee and the Type.
Enter the value for that type: the Amount for a fixed penalty, the Days of Salary (up to 30, in steps of half a day), or the Percentage (up to 100).
Enter the Reason, which prints on the payslip, and the Issued date. Add Notes if needed.
Select Issue. The penalty is saved as pending.
Approve or cancel
To approve, open the row's Actions menu, select Approve and confirm. Only users with the penalty approval permission see this action.
To cancel, select Cancel penalty and confirm. You can cancel a pending penalty, or an approved one that payroll has not deducted yet.
A penalty cannot be edited. To correct one, cancel it and issue a new one.
How the payroll run calculates the amount
The amount is worked out when payroll deducts it, from the employee's basic salary for that period:
Type | Amount deducted |
|---|---|
Fixed amount | the amount you entered |
Days of salary | days × basic salary ÷ 30 |
Percentage | basic salary × percentage ÷ 100 |
The divisor for days of salary is always 30, whatever the length of the month. When salary proration applies to a joiner or leaver, the base is the prorated basic salary.
The run deducts every approved penalty that has not been deducted yet and whose issue date is on or before the last day of the payroll period.
Order, limits and tax
Penalties come last, after statutory deductions, income tax and loan installments.
Net pay never goes below zero. If the pay left is smaller than the penalty, the run deducts only what fits and marks the penalty as deducted. The rest is not carried to the next month. If nothing is left at all, the penalty stays approved and waits for the next run.
A penalty does not reduce taxable income.
Rolling a payroll run back to draft returns its penalties to approved and not yet deducted, so the next processing deducts them again.
Common questions
I issued a penalty but the payslip does not show it. Check that it was approved before the run was processed. A pending penalty is never deducted. If the run was already processed, roll it back and process it again.
Where do penalties with a rule come from? They are created by attendance policy rules from repeated lateness, absence or early leave.