Correct Pay Errors and Process Payments After Leaving in UK Payroll

Learn how to fix pay mistakes, make off-cycle payments, and pay employees after they’ve left—without rerunning payroll.

UK Payroll is a live system. Once a payroll is submitted, it can’t be rerun. This is because tax codes, student loans, and other statutory updates are automatically applied to open payrolls. Re-running a submitted payroll could result in incorrect net pay.

Instead, any corrections are handled in a later payroll or through manual payments, depending on the scenario.

Fixing an overpayment

If an employee was overpaid, you can recover the amount by adding a gross deduction to their next payroll.

1. Go to Payroll and open the current payroll cycle.

2. Select the employee.

3. Click Add pay item → Gross deduction.

4. Choose Custom gross deduction.

5. Enter a clear description and the amount.

6. Toggle Pensionable if the deduction shouldn’t affect pension calculations.

7. Click Add gross deduction.

The deduction will appear on the employee’s payslip preview.

Fixing an underpayment

You can resolve underpayments in one of two ways, depending on urgency.

Option 1: Add a gross addition to the next payroll

1. Open the current payroll cycle.

2. Select the employee.

3. Click Add pay item → Gross addition.

4. Choose Custom gross addition.

5. Enter a description and amount.

6. Toggle Pensionable if needed.

7. Click Add gross addition.

The additional payment will appear on the payslip preview.

Option 2: Pay the employee before payday

If the employee needs the funds before payroll runs:

• Calculate the net amount owed.

• Apply a net advance on their payslip.

• Make the payment manually outside payroll.

This ensures the employee isn’t paid twice when payroll is finalized.

Paying someone after they’ve left (Payment After Leaving)

You may need to pay an employee after termination—for example, for accrued holiday, notice pay, a bonus, or to correct their final pay. Since payroll can’t be rerun, this is handled using a Payment After Leaving (PAL).

Before processing a PAL, keep the following in mind:

• Use tax code 0T, S0T, or C0T (based on location) on a week 1 / month 1 basis.

• Deduct National Insurance and student loans as normal, unless the payment is redundancy-related.

• Treat irregular payments (such as accrued holiday or unexpected bonuses) as weekly for NI purposes.

• Report the payment in your next FPS using the original leaving date and employee ID, marked as a payment after leaving.

• Include the payment in year-to-date figures if it’s in the same tax year.

• Provide a payslip for the payment.

A new P45 is not issued for payments after leaving.

Create a Payment After Leaving payslip

1. Go to Employees and filter by Terminated.

2. Select the employee.

3. Click Actions → Payment After Leaving.

4. Choose the payment type:

   • Regular payment (standard NI thresholds), or

   • Irregular payment (weekly NI thresholds).

5. Choose when the payment should be made:

   • Upcoming payroll, or

   • A custom date.

If you choose a custom date, select how the payment should be handled:

• Automatically apply pay advance deduction – HiBob applies a net advance so the employee isn’t paid again.

• Manually add pay advance deductions – Useful for partial payments.

• Do not process payment for this employee – You handle both the payment and deduction manually.

Click Enable & close, then add pay items just as you would in a normal payroll draft.

By using these workflows, you can confidently correct pay issues, handle off-cycle payments, and process payments after leaving—while staying compliant with HMRC requirements.