How to Process a Pay Run in Odoo

Processing a pay run is the bread and butter of payroll. In Odoo, a pay run involves generating payslips for a group of employees for a specific pay period, verifying the calculations, exporting bank payments, and lodging STP. This guide walks through the entire process from start to finish.

Before you start: pay run checklist

• ☐ All timesheets/rosters for the period are submitted and approved
• ☐ Leave requests for the period are approved (or rejected)
• ☐ Any new employees have been set up with contracts, TFN, super fund
• ☐ Any terminations have been processed
• ☐ Ad-hoc payments (bonuses, commissions, reimbursements) are documented
• ☐ Salary changes effective this period have been updated on contracts

Step 1: Review work entries

Work entries are the building blocks of payslips. They represent hours worked and how they should be classified:

• Go to Payroll → Work Entries → Work Entries
• Filter by the current pay period
• Review for conflicts (shown in red): these are usually overlapping entries, missing entries, or unlinked attendances
• Resolve any conflicts — common issues include employees with no work schedule, or leave requests not approved
• If using timesheets, verify that hours from the Timesheet module have flowed through correctly
• If using the Planning module, verify that shifts are correctly mapped to work entry types

Step 2: Generate payslips

• Go to Payroll → Payslips → All Payslips
• Click Generate Payslips
• Select the salary structure, department (or all), and pay period dates
• Odoo creates a draft payslip for each eligible employee
• The payslip calculations include: gross pay (based on work entries), PAYG withholding (from ATO tax tables), superannuation (% of OTE), deductions, net pay

Step 3: Review payslips

This is the most important step. Review payslips before confirming:

• Open each payslip and check the Salary Computation tab
• Verify gross pay matches expected hours × rates
• Verify PAYG withholding is reasonable (use the ATO tax tables or tax calculator to spot-check)
• Verify super is calculated correctly (12% of OTE for 2025-26)
• Check for any unusual amounts — missing penalty rates, incorrect overtime, etc.
• For employees on leave, verify leave pay is at the correct rate (including leave loading if applicable)
• Check the Net Pay — is it in the expected range for this employee?

Step 4: Handle ad-hoc items

Before confirming, add any one-off items:

• Bonuses — Add as an "Other Input" line on the payslip. Ensure PAYG and super are calculated on it.
• Commissions — Add with the correct income type for STP reporting.
• Expense reimbursements — Add as a non-taxable line (no PAYG, no super).
• Salary sacrifice adjustments — Verify the pre-tax deduction is correct.
• Child support deductions — If you've received a notice from Services Australia, deduct the specified amount.
• Back-pay — If correcting a previous underpayment, add as a separate input with the correct period reference.

Step 5: Confirm payslips

• Select all reviewed payslips
• Click Confirm (or use the batch "Confirm" action)
• This locks the payslips — amounts can no longer be changed without creating a correction
• Journal entries are created in Odoo Accounting: debiting salary expense and crediting payables (net pay, PAYG liability, super liability)
• Leave balances are updated for any leave taken during the period

Step 6: Export bank payment file

Generate the bank file to pay your employees:

• Go to Payroll → Payslips → Batches
• Select the confirmed batch
• Click Generate Bank File — this creates an ABA file (Australian Bankers Association format)
• The ABA file contains each employee's BSB, account number, and net pay amount
• Upload the ABA file to your bank's internet banking portal
• Schedule the payment for pay day
• Some banks (CommBank, ANZ, NAB, Westpac) allow automated upload via API — consider this for larger businesses

Step 7: Submit STP report

STP must be lodged on or before pay day:

• Go to Payroll → Reporting → STP Submission
• Review the STP data — gross, PAYG, super, income types, disaggregation
• Submit to the ATO
• Wait for the acknowledgement — "Success" or "Error with details"
• If errors occur, fix the underlying employee data and resubmit

Step 8: Process superannuation

• Export the super contributions file from Payroll → Reporting → Super Contributions
• Upload to your clearing house (ATO Small Business Super Clearing House or commercial provider)
• Make the super payment — a single bank transfer to the clearing house
• The clearing house distributes to individual employee super funds
• While the ATO deadline is quarterly, best practice is to pay super each pay run

Step 9: Distribute payslips

• Employees can view their payslips in the Odoo Employee Self-Service portal
• Alternatively, email payslips as PDF: select payslips → Print / Send by Email
• Payslips must show: employer name, employee name, pay period, gross earnings breakdown, deductions, net pay, YTD totals, super contributions
• Under the Fair Work Act, you must provide payslips within 1 business day of payment

Step 10: Reconcile payroll in accounting

After the pay run, verify the accounting entries:

• Check the Salary Expense accounts in the general ledger
• Verify the PAYG Withholding Liability account balance — this should be remitted to the ATO as per your BAS lodgement schedule
• Verify the Super Liability account — cleared when super is paid via the clearing house
• Reconcile the bank transaction against the ABA file payment
• If using the Accounting module, the bank reconciliation should match the payroll bank payment automatically

Pay run timeline (typical fortnightly)

• Monday — Timesheet deadline. Chase missing submissions.
• Tuesday morning — Review work entries. Resolve conflicts. Generate payslips.
• Tuesday afternoon — Review payslips. Add ad-hoc items. Confirm.
• Wednesday morning — Generate and upload ABA file. Lodge STP. Export super file.
• Wednesday (pay day) — Payments hit employee accounts. Distribute payslips.
• Thursday — Reconcile payroll in accounting. Address any employee queries.