Corrective Procedure: Handling Final Pay for Transitioned Consultants

Scope: This article applies only when a Consultant who transitioned to a Regular Employee was incorrectly retained under their original Consultant profile, and their Final Pay has already been processed under that same profile. If a new profile was created at the time of transition (as required), this procedure does not apply.

Root Cause

When a Consultant becomes a Regular Employee but continues to be paid under the same profile, the system mixes consultant fees with regular salary records. This corrupts tax annualization and produces incorrect Final Pay computations, since the system cannot distinguish which earnings belong to which employment type.

Important: Always Create a New Profile for Consultant-to-Regular Transitions
From the moment a Consultant becomes a Regular Employee, a new employee profile must be created — the transition should be treated exactly like a rehire. This keeps consultant fees and regular salaries separate, ensuring accurate tax annualization and Final Pay outputs.

If this wasn't done and a Final Pay has already been processed incorrectly, follow the corrective steps below.

Prerequisite

Before starting this procedure, confirm that the employee's new Regular Employee profile already exists in the system. If it doesn't, create it first — it will be needed before Final Pay can be reprocessed in Step 4.

Step 1: Secure Current Records

Before making any changes, download the Payroll Register and Payslip for the incorrectly processed Final Pay.

• Why? These serve as your backup and reference point to verify numbers once the corrective adjustments are applied.

Step 2: Remove the Existing Final Pay Run

1. Unpost the processed Final Pay.
2. Delete the Final Pay run from the system.

Step 3: Offset the Consultant Period via an Adjustment Run

Using an Adjustment Run in Payroll, create negative adjustments to offset the earnings and deductions from the period when the employee was still a Consultant (e.g., the January Payroll Run).

• Note: This does not mean editing or deleting historical payroll records. The negative adjustments neutralize the consultant-period amounts without altering the original run, isolating the employee's regular employment data for correct annualization.

Step 4: Reprocess the Final Pay

Once the adjustment run from Step 3 is successfully saved and posted, process the Final Pay again under the employee's Regular Employee profile.

The system will now calculate tax, annualization, and separation amounts based strictly on regular employment data, yielding the correct Final Pay.

Step 5: Validate Before Posting

Before posting the newly reprocessed Final Pay, verify:

• The Payroll Register reflects the corrected amounts
• The Payslip matches expected earnings and deductions
• The tax computation aligns with regular employment annualization

Only post once all figures have been confirmed as accurate.

Best Practice: Always create a new employee profile when a Consultant becomes a Regular Employee. Treating the transition as a rehire from day one prevents the tax and Final Pay computation issues addressed in this article.