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Administrator Guide
Last Updated: 2025-09-19
Setup Considerations: Payroll Reversals

Setup Considerations: Payroll Reversals

You can use this topic to help make decisions when planning your configuration and use of reversals. It explains:
  • Why to set them up.
  • How it fits into the rest of Workday.
  • Downstream impacts and cross-product interactions.
  • Security requirements and business process configurations.
  • Questions and limitations to consider before implementation.
Refer to detailed task instructions for full configuration details.

What They Are

You can record a negative version of a completed payment that you haven't reconciled with a bank statement. You can then replace the reversed amount by a different calculation. Running reversals creates new reversal result lines and impacts accounting.

Business Benefits

Payroll reversals:
  • Provide flexibility in processing.
  • Help improve efficiency.
  • Enable you to correct payroll errors.

Use Cases

Create reversals to correct payments when:
  • The HR partner terminates a worker at the start of the last pay period in the prior year, but doesn't record the termination until the new year. You reverse the worker's final payroll payment as a prior period adjustment.
  • A terminated worker receives an incorrect payment after leaving.
  • The HR partner hires a worker after the payment date of the current pay period. You reverse the payment made for the period, and run an on-demand payment to include all year-to-date pay accumulations.

Questions to Consider

Questions
Considerations
Is the payroll result that you need to reverse in an open or closed ledger period?
When the accounting date of the payroll result is in an open ledger period, Workday:
  • Associates the reversal result with the reporting period you select from the
    Pay Calculation > Reversal
     related actions menu.
  • Creates reversing journal lines in the Payroll Actual Accrual Journal and uses the accounting date from the original Operational Journal.
When the accounting date of the payroll result is in a closed ledger period, Workday:
  • Associates the reversal result with the reporting period you select from the
    Pay Calculation > Reversal
     related actions menu.
  • Creates reversing journal lines in the Payroll Actual Accrual Journal and uses the first day of the next open ledger period as the accounting date.
You can run the:
  • Fix Operational Journals With Errors
     task to investigate how Workday posts reversals.
  • Ledger Period Journal Status
     report to check the accounting period status.
Which period do you want to report reversals in?
When you run reversals, you can select a current or prior reporting period. When the reporting period is current, you can use any run categories associated with the original payment pay group. When it's a prior period, you can use the run category of the original payment or the regular run category of the pay group.
What is the timeline of the reversal?
You can only run reversals for payments you haven't reconciled yet with the bank statement. When it's too late for a reversal, you can run:
  • On-demand or manual payments. Example: You’re notified of a worker's move after a couple of quarters. You need to adjust their taxes and wages to ensure that Workday Payroll data is accurate for year-end reporting.
  • Retro pay calculations for the prior period. Example: You overpaid a worker due to incorrect time entries. After you enter the actual time worked and run retro, Workday recovers the base pay and refunds deductions on the worker's next pay.
For Payroll for the UK, when you retrospectively change a worker's National Insurance (NI) category, also adjust previously calculated NI deductions and the associated balance. To make NI adjustments after the end of the tax year and before April 19, you can use:
  • Reversals and on-demand additional payments, if the adjustments result in negative net pay.
  • On-demand payments, if the adjustments don't result in negative net pay.
You can then submit the result to HMRC by FPS.
What is the status of the payments that you want to correct?
You can correct on- or off-cycle payments based on their calculation status and whether you've settled them. For in-progress results that are:
  • On-cycle, you can cancel 1 result at a time.
  • Off-cycle and loaded using EIBs, you can cancel multiple results at a time.
For completed results that are:
  • On-cycle and not settled, you can cancel results for the whole pay group.
  • Off-cycle, not settled, and in the current period, you can cancel 1 or multiple results at a time.
  • Settled but not reconciled with the bank statement, you can reverse 1 result at a time.
Workday sets the status of nonsettled results to
In Progress
, and the accounting status to
Created
. When you use Workday Payroll commitment accounting, Workday also sets the liquidation accounting status to
Created
.
When you want to correct:
  • Specific pay component calculations, you can cancel or reverse the pay result, and adjust amounts using on-demand or manual payments.
  • Reversals, you can offset them by running on-demand or manual payments.
What are your ROE reporting requirements (CAN)?
When you reverse a payment that you reported on the ROE, Workday allocates the reversal to the same reporting period. When you don't report a payment and later reverse it, Workday excludes the reversal from the ROE. Example: Workday doesn't report a payment on the ROE because it exceeds the Service Canada requirements for maximum reporting periods. When you reverse that payment Workday ignores the reversal for the ROE.

Recommendations

When you don't use Workday Financials for accounting, you might find discrepancies when you leave accounting periods open. You can configure business processes to include closing accounting periods.
Workday recommends that you use reversals only when necessary due to potential conflicts with accounting periods.

Requirements

You can reverse a payment for a worker in a completed pay period that:
  • You haven't reconciled with your bank statement.
  • Doesn't have payroll accounting adjustments.
  • Doesn't have an escheatment in progress or
    Escheated
     status.
  • Doesn't have associated journals in error.

Limitations

Workday doesn't:
  • Settle reversals. The original payment and the reversal remain on the books. Although Workday doesn't settle reversals, you must still complete it.
  • Display reversals on payslips.
  • Support reversals for Payroll for France or Ireland.
You can't:
  • Edit reversal dates. You can run on-demand or manual payments to adjust reversals. You can also run the
    Cancel Off-cycle Complete
     task to cancel completed reversals for the current pay period.
  • Reverse zero pay results created by retro events such as leaves of absence. You can remove it by canceling the retro result that contains the retro leave event.
  • Reverse a completed payroll history. You can adjust or offset completed history results using the
    Run History Payment for Worker
     task. You can also correct single history payments by accessing their related actions menu. Workday sets the status of the payment to
    In Progress
    .
  • Reverse a payment for a worker who has a next period on-demand payment.
When you forward retro differences to the current period from a period that you reversed, manually remove the differences in the current period. Example: You can offset retro differences using payroll input. When you forward retro differences to a period and later reverse that period, Workday:
  • Recovers the retro differences.
  • Adds them to the worker's current pay results.

Tenant Setup

No impact.

Security

Domains
Considerations
Process: Load, Calculate, Cancel, Complete History
 in the Core Payroll functional area.
Enables users to adjust or offset completed history results.
Process: Period End
 in the Common Financial Management functional area.
Enables users to check the accounting period status.
Process: Run Batch Cancel Complete
 in the Core Payroll functional area.
Enables users to cancel a completed on-cycle payroll.
Reports: Pay Calculation Results for Pay Group (Results)
 in the Core Payroll functional area.
Enables users to identify workers with retro differences when you later reverse the source or target period.
Set Up: Payroll - Company Specific (Accounting)
 in the Core Payroll functional area.
Enables users to investigate how Workday posts reversals.

Reporting

Reports
Considerations
Ledger Period Journal Status
Check whether an accounting period is open or closed.
Reversal Results with Retro
Identify workers with retro differences when you later reverse the source or target period.
Payroll Off-cycle Payments for Group of Worker
Create custom reports that contain information about reversals.

Integrations

Tax filing integrations don't include reversed pay results, so reports such as the
Purged Workers with Completed Payroll Results
 report don't display those results.
You can use the
Import Payroll Off-Cycle Payment
 web service to run manual payments in bulk that offset completed on- or off-cycle results instead of running individual reversals.

Connections and Touchpoints

Features
Considerations
Accounting
When you run reversals, Workday generates accounting when there's a gross-to-net change. Reversals don't create, cancel, or reverse forward accrual journals.
Payroll processing
For a worker in a given pay group and period, you can run multiple payment types. Workday processes the payments in this order to update pay accumulations and pay balances:
  1. Manual
  2. Reversal
  3. On-demand
  4. On-cycle
When you try to process payments out of order, Workday enforces this sequence by setting the calculation status of any result type that depends on prior calculations to
Pending Completion of Prior
.
Pay balances
When you run reversals, Workday updates pay accumulation and pay balance results. For balances based on:
  • Period dates, Workday updates the balances for the reporting period.
  • Payment dates, Workday updates balances for the period that includes the payment date of the result you reversed.
USA year-end (USA)
Reversals can result in differences between tax filing data and W-2, and impact year-end reporting.
Workday offers a Touchpoints Kit with resources to help you understand configuration relationships in your tenant. Learn more about the Workday Touchpoints Kit on Workday Community.