Unjust enrichment and recovering the overpayment always go hand in hand on Incomes register reports. If Unjust enrichment row exception has been used on the salary slip, the recovery should be done using the same salary type with the row exception Recovery. This article will give an example of how unjust enrichment and recovery are handled in Procountor.
Please note that this is merely an example and should be used with discretion. The correct procedure of handling unjust enrichment and recovery in a specific case should always be checked with the Incomes register.
Unjust enrichment and recovery procedure cannot be used to correct fringe benefits.
Reporting unjust enrichment
In this example, the salary has already been paid and reported to the Incomes register. It is later discovered that the employee has been erroneously paid an excess of 200 € in January and this overpayment will be recovered in the next salary. This overpayment must be reported with the Earnings payment report as an unjust enrichment.
The picture below shows the rows of the first salary slip, and the one underneath this shows the earnings payment report.
The earnings payment report can be corrected as follows:
1. Create a salary slip for the same employee that has the same basic employee information, payment period, earnings period, and payment date as the original salary slip. You can use the Copy original delivery data
- Change the quantity of base salary row (monthly salary) to -1 and the unit value to the overpayment sum 200 €. The total should be -200 €. (A row exception cannot be set for a base salary row)
- Add a second monthly salary row with the unit value 200 € and row exception Unjust enrichment.
- When the Unjust enrichment row exception is added to the salary row, Procountor will not withhold taxes, as the base salary total amount is 0 €, but will automatically calculate and deduct Employees Pensions Act contribution (TyEL) and unemployment insurance payment.
- If the intention is not to pay the net salary consisting of deductions from net pay on this particular salary slip, this should be corrected in one of the following ways:
Option 1. Correct by using the salary type 6100 Net liability.
- When using this salary type, the correction is not reported to the Incomes register. The row is merely an informative one and meant only to make the necessary deductions. This same salary type can be used to transfer the correction to the next salary slip, where these deductions will be reimbursed to the employee.
Option 2. Correct by using the salary type 6021 The Employees Pensions Act contribution correction (TyEL) and 6031 Unemployment insurance payment correction.
- These salary types intended to correct deductions from net pay are reported to the Incomes register with the earnings payment report. This same salary type can be used to transfer the correction to the next salary slip, where these deductions will be reimbursed to the employee.
2. Mark the salary slip as Mark as paid elsewhere so it will not remain an open invoice in Procountor.
3. Go to Notifications > Incomes register > Earnings payment report and create a replacement report for the original January salary slip. First, select the earnings payment report from the list, and click Create replacement report.
- If the new salary slip has the same employee, payment period, payment date, and basic employee information as the original salary slip, Procountor will automatically suggest this salary slip for the replacement report. Select the slip and complete the replacement report.
- Check the earnings payment report and ensure that the two salary lists have been included on the report.
- Make sure that the 200 € has been deducted from the time-rate pay. If there are three time-rate pay rows, return to the corrective salary slip and ensure the salary type Monthly salary has the same earnings period as the original salary slip salary type Monthly salary. Then create the earnings payment report again.
- Check that the report includes time-rate pay with unjust enrichment.
4. Send the earnings payment report to the Incomes register.
5. If you have already made an Employers’ separate report for this period, remember to create a replacement report to adjust the insurance payment amount.
Recovery of overpayment
Unjust enrichment and recovery of the overpayment always go hand in hand. The unjust enrichment was reported on the January earnings payment report, and the overpayment of 200 € is to be recovered from the employee in February.
1. Create the February salary slip for the employee as usual.
- Add corrective salary type rows on the salary slip. Add the salary type Monthly salary to the slip again to report the recovery of overpayment.
- Row exception: Recovery disables net pay deductions for this row, and automatically inverts the total sum to a negative value. Additional information about the recovery must be filled out to the Additional row information
The Additional row information section contains the following fields:
Tax at source
- If the sum to be recovered is subject to tax at source, the excess amount of the withheld tax at source can be filled out in the Tax at source
Set withholding tax for net recovery
- In cases where the recovery is to be made on a net basis, the tax sum of the recovery sum should be filled out in this field. This sum directly affects the tax row on the salary slips and decreases it.
- Procountor does not automatically calculate the amount of excess tax withheld. This must be calculated manually.
Payment period start and end
- Fill out the dates of the payment period when the unjust enrichment was reported.
Earnings period start and end
- Fill out the dates of the earnings period when the unjust enrichment was reported.
Payday
- Fill out the salary payday when the unjust enrichment was reported.
2. After filling out the additional information, the deductions from net pay must be corrected in cases where they were corrected along with the unjust enrichment. This example will use Net liability salary type to correct the net pay deductions.
- Add the Net liability salary type to the salary slip with the same sum as it was in the unjust enrichment, but as a negative sum.
- This salary type only affects the net salary sum and is not reported to the Incomes register.
3. Pay the salary slip as usual and move on to the Earnings payment report.
4. Create a report for February. Check the following things on the report:
- Additional information about the recovery will be sent to the Incomes register, and this will be shown on the earnings payment report view. The withholding tax of the recovery, that was determined on the salary slip, is shown separately. The total sum of the withholding tax will also be shown on the withholding tax row, and the recovery withholding tax will not be deducted from this sum. This deduction is done later by the Incomes register.
5. Send the report to the Incomes register.