What does backpay mean?
Back pay refers to any form of the unpaid financial compensation that the company owes the employee. It resolves any differences between employees and their employers, as well as what the employer was required to pay according to the minimum wage and overwork regulations.
Employees sometimes receive back pay after receiving a salary increase, which may take time for payroll systems to process, sometimes when an employee is terminated from a certain position, and it may also include hourly wages, overtime, bonuses, commissions, and always associated with the penalties that an employer must pay for a wage violation.
What is the difference between back pay and retroactive pay?
Although there is no precise definition for the terms “back pay” and “retroactive pay,” people prefer to use them differently depending on the situation.
The payment that the employer still owes the employee for work that has already been completed is known as the back pay salary, as previously described. Retroactive pay, however, may be able to correct faults like the payroll inaccuracies. For instance, an employee’s pay may have been calculated incorrectly when compared to their prior payment.
Back pay and the employment ordinance in Australia
If an employer underpays an employee’s salary, they are required to give back pay. Whether or not the underpayment was deliberate, the employer is nevertheless required to cover the whole amount of unpaid overtime.
The Fair Work Act of 2009‘s wage and pay regulations may be broken by an employer that fails to make back pay. A court case and financial penalties can result from this.
How can Workstem assist you?
Customise attendance entitlements, auto-track attendance data, streamline the payment process such as back pay, lump sum payment, ETP, etc. and keep compliance with Fair Work award through our AI Engine. Workstem provides a complete solution for efficient payroll management and regulatory compliance.