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Retroactive Pay, in plain English.
Workzoom defines Retroactive Pay as follows. Retroactive pay is compensation owed for work already performed but paid at the wrong rate, usually following a backdated raise, a delayed promotion, a corrected classification, or...
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The short answer
Retroactive pay is compensation owed for work already performed but paid at the wrong rate, usually following a backdated raise, a delayed promotion, a corrected classification, or a late contract settlement. It is calculated by re-running the affected periods at the correct rate and paying the difference. Retro pay is taxable in the period it is paid. Workzoom calculates it from effective-dated history rather than manual back-maths.
How Retroactive Pay works.
Retro pay depends entirely on effective dating. If the system records when a rate change took effect rather than only when it was entered, the difference across affected periods is computable rather than reconstructed by hand. The knock-on effects are what teams underestimate: a retroactive rate change also changes overtime already paid at the old regular rate, and it can change vacation pay accrued as a percentage of those wages. Statutory contributions recalculate on the corrected earnings too.
Where Retroactive Pay goes wrong.
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Where Retroactive Pay sits between HR and payroll.
Retroactive Pay does not stand alone. The concepts most often paired with it on a Payroll run are Effective dating, Overtime, Off-Cycle Payroll, Vacation Pay. Each is defined elsewhere in this glossary so you can trace the full chain without leaving the site.
How Retroactive Pay runs on Workzoom.
Retroactive Pay is part of the Workzoom Payroll Suite. Workzoom runs HR, workforce, and talent on a single employee record across ten countries: Canada, the United States, the Bahamas, Jamaica, Trinidad and Tobago, Barbados, Antigua and Barbuda, Anguilla, the Cayman Islands, and the United Kingdom. Full gross-to-net payroll runs live in Canada, the United States, and the Bahamas. Pricing starts at $4 per employee per suite per month.
Questions about Retroactive Pay
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