Payroll

Retroactive Pay, in plain English.

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.

Book a Workzoom walkthrough 26+ years of HR and payroll production. Live in Canada, the US, and the Bahamas.

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.

  1. Paying only the base difference and ignoring the overtime recalculation is the most frequent shortfall, because overtime was computed on a regular rate that has now changed.
  2. The second issue is timing: retro pay is generally taxed in the period paid rather than the period earned, so a large catch-up can push withholding higher than the employee expects and generate a support call.
  • 2000 Running payroll since Workzoom has run Canadian payroll for 26+ years.
  • Canadian hosting on AWS available
  • Trusted in production County of Renfrew, Silvera for Seniors, and Cable Bahamas. Built for 50 to 5,000 employees.

In the product

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.

See Workzoom in 30 minutes

Keep reading

Related terms.

Questions about Retroactive Pay

A backdated raise, a delayed promotion, a corrected pay classification, or a late collective agreement settlement. In each case work was performed and paid at a rate later determined to be wrong, so the difference is owed.
Usually yes. Overtime is calculated on the regular rate, so a retroactive change to that rate means previously paid overtime was also underpaid. Paying only the base difference leaves a shortfall.
Retro pay is generally taxed in the pay period in which it is paid rather than the period in which it was earned. A large catch-up payment can therefore carry higher withholding than the employee expects.
Read more

More on Retroactive Pay

Playbooks and teardowns from teams putting it into production.

Best Canadian Payroll Software 2026: 12 Options Compared Payroll

Best Canadian Payroll Software 2026: 12 Options Compared

Find the best Canadian payroll software for your team: compare 12 options, pricing models, Quebec reporting, migration checks and Workzoom cost examples.

Wed Sep 02 2026 00:00:00 GMT+0000 (Coordinated Universal Time) Read article Jamaica NIS Employer Registration: No Number, No Withholding Caribbean

Jamaica NIS Employer Registration: No Number, No Withholding

TAJ handles Jamaica NIS employer registration, not the NIS office. The portal differs from the individual card login, and NHT filing follows after.

Wed Nov 26 2025 00:00:00 GMT+0000 (Coordinated Universal Time) Read article Best HR Software for Barbados Employers (2026 Guide) Caribbean

Best HR Software for Barbados Employers (2026 Guide)

The best HR software for Barbados compliance: Employment Rights Act, NIS, BRA payroll. See how Workzoom handles the Caribbean workforce.

Wed Nov 19 2025 00:00:00 GMT+0000 (Coordinated Universal Time) Read article Small Business HR Software Canada: The Enterprise Sold Down HR

Small Business HR Software Canada: The Enterprise Sold Down

HR software for small business in Canada should let CPP2 and EI run themselves. If your vendor quoted setup fees and a Q3 go-live, they sold the wrong size.

Wed May 27 2026 00:00:00 GMT+0000 (Coordinated Universal Time) Read article

Get started

Run HR, payroll, workforce, and talent on one platform.

$4 per employee per suite. 50 to 5,000 employees. Sprint-based, client-paced go-live.

Workzoom works with organizations of 50 or more employees. See our minimums.

Loading available times.