Payroll

Fixing a Payroll Error After Payslips Have Gone Out

Decide underpaid or overpaid, tell the employee first, and stay inside the 60% deduction cap when recovering an overpayment. The steps and limits here.

Updated September 23, 2026 Reviewed by Anudi Imesha, Customer Success Consultant, Humanised HR and Payroll 5 min read

On this page
  1. Underpayment: pay the difference now
  2. Overpayment: what you may lawfully recover, and how
  3. Correcting after EPF and ETF have been filed
  4. APIT adjustments within the year
  5. Reissuing the payslip vs an adjustment line
  6. What to write to the employee
  7. Stopping it happening again: three checks
  8. Frequently asked questions
  9. Can I deduct an overpayment from an employee's next pay without asking?
  10. Is there a deadline for recovering an overpayment?
  11. Do I need to amend the EPF or ETF return if I already filed it?
  12. Should I reissue the payslip or just add a correction line next month?
  13. What if the employee has already left the company?
  14. Does a payroll error need to be reported to the Labour Department?

First, work out which kind of error it is: did you pay too little, or too much. Tell the employee before you change anything. Fix an underpayment now, in full. Fix an overpayment only with the employee’s consent. Keep the total of all deductions taken at one time under 60% of the remuneration (the Act’s word for salary or wages, including cost-of-living allowance, overtime pay and prescribed allowances) then due. This sits under five main Sri Lankan payroll statutory payments, which covers the payment rules this page assumes.

ErrorWhat the Act requires
UnderpaymentNo separate deadline stated; pay the difference as soon as you find it
OverpaymentAn authorised deduction (a deduction the Act allows), made with the employee’s consent; the total of all deductions taken at one time is capped at 60% of the remuneration then due

Underpayment: pay the difference now

If you paid an employee less than they were due, pay the difference as soon as you find the mistake. The Act does not set a separate deadline for a correction like this. Treat it as money already owed, not as a new pay item. Add it to the next pay run, or pay it separately, whichever is faster. For the mistakes that cause this in the first place, see common payroll mistakes in Sri Lanka.

Overpayment: what you may lawfully recover, and how

Under the Shop and Office Employees Act, remuneration must be paid without any deduction other than an authorised deduction made with the employee’s consent. Statutory deductions, such as income tax and EPF, and a deduction under a court order sit outside this rule and are always allowed. The named authorised-deduction categories are narrow: an advance of money to the employee, or a payment the employee has asked to be sent to someone else. The Act does not spell out overpayment recovery as its own category.

In practice, this means:

  1. Explain the overpayment to the employee in writing, with the amount and how it happened.
  2. Get their written agreement to the deduction before you take it from pay.
  3. Keep the deduction, together with any other deduction taken at the same time, under 60% of the remuneration then due.
  4. Spread a large overpayment over more than one pay run if the 60% cap does not allow it to come out in one go.

The Act sets no fixed timeline for how fast you must recover an overpayment, and no fixed limit on how far back you can go. Agree a repayment plan with the employee rather than assuming a legal deadline exists.

Correcting after EPF and ETF have been filed

EPF and ETF are paid on the figures in that month’s Form C, R1 or R4. Neither the EPF nor the ETF guide sets out a public procedure for amending a return already filed. Contact the EPF Department or the ETF Board directly for the correct process. Do not change a filed return on your own assumption. If the correction adds a contribution that is now late, the usual surcharge bands may apply to that shortfall. These run from 5% up to 50%, by how late it is, the same as for any late payment.

APIT adjustments within the year

The IRD’s Table 5 lets an employer switch an employee to a cumulative tax calculation. It is for an employee whose cumulative pay crosses the thresholds, or who starts or leaves mid-year. Whether Table 5 fits your specific correction, rather than a plain adjustment on next month’s schedule, depends on the case. Check with the IRD or your tax adviser first.

Reissuing the payslip vs an adjustment line

Two ways to show the fix on the payslip:

  • Reissue the payslip for the affected month, showing the corrected figures. Clearer for the employee, but changes a record already given out.
  • Add an adjustment line to the current month’s payslip, showing the correction separately from this month’s normal pay. Keeps the original payslip as issued, and shows the fix in the open.

Either way, keep a note of what changed and why, alongside both payslips. Record the correction in your books too. See Payroll Journal Entries for Sri Lankan Employers for how a payroll journal entry works.

What to write to the employee

Cover four things in writing, before or alongside the fix:

  1. What went wrong, in plain terms.
  2. The amount involved, and which pay period it affects.
  3. What happens next: extra pay now, or a deduction plan with the amount per pay run.
  4. Who to ask if they have questions about the correction.

Stopping it happening again: three checks

  1. Compare this month’s gross pay to last month’s for every employee, and explain any large jump before you finalise the run.
  2. Check EPF, ETF and APIT are calculated on the same earnings figure that gross pay shows.
  3. Get a second person to approve the pay run before payslips go out, even in a small team. See why audit trails are important for payroll software.

Do this automatically in Humanised. Payroll software Sri Lanka lets you reopen a completed pay run and regenerate the payslip once you fix the error. There is a free 7-day assisted trial, set up by the Humanised team on your own data.

This is general payroll guidance. Every case is different. For your own case, speak to a payroll practitioner or a lawyer.

Frequently asked questions

Can I deduct an overpayment from an employee’s next pay without asking?

Not safely. The Act requires the employee’s consent for this kind of deduction. Get written agreement first, and keep the total of all deductions taken at one time under 60% of the remuneration then due.

Is there a deadline for recovering an overpayment?

The Act sets none. Agree a repayment plan with the employee instead of assuming a fixed deadline.

Do I need to amend the EPF or ETF return if I already filed it?

Neither guide sets out a procedure for amending a return already filed. Contact the EPF Department or ETF Board for the correct process rather than resubmitting on your own assumption.

Should I reissue the payslip or just add a correction line next month?

Either can work. A reissued payslip is clearer for the employee. An adjustment line keeps the original record intact and shows the fix separately. Pick one and keep a written note of the reason either way.

What if the employee has already left the company?

Pay an underpayment to them directly; get their account details if needed. Recovering an overpayment from someone who has left needs their agreement too, and is harder to arrange without payroll access to future pay. Get advice if they will not agree.

Does a payroll error need to be reported to the Labour Department?

No source we checked sets a reporting duty for a simple pay correction. Keep your own written record of what happened and how you fixed it.

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