How the payroll cut-off works
Payroll takes time: HR has to close attendance, collect inputs such as incentives and reimbursements, run the calculation, review it and prepare the bank file. Working backwards from the pay date gives the cut-off. Some companies set it around the 25th and pay on the last working day, assuming full attendance for the last few days and correcting any difference next month. Others close the full month and pay early in the following month. Under the Code on Wages, monthly wages must be paid by the 7th of the following month, so the cut-off must leave enough time before that date. See the wage payment timelines.
Cut-off date versus attendance month close
The cut-off is a calendar deadline announced to employees and managers. Month close is the action HR takes to finalize attendance so that it cannot change. The two should line up: after the cut-off, HR resolves open requests and closes the month. If the attendance period runs from the 26th to the 25th instead of the 1st to the last day, the cut-off and the end of the attendance period become the same date, which removes the need to assume anything about the last few days.
Telling people about the cut-off
A cut-off only works if managers and employees know it well before the day. Most late inputs are approvals left waiting with a manager who did not notice the deadline was close, not requests that employees raised late.
- Publish the dates for the whole year in the payroll calendar
- Remind managers two days before to clear pending approvals
- Say clearly what happens to late requests
- Keep the same date every month where possible
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What is a cut-off date in payroll?
It is the last date by which attendance, leave, overtime and other payroll inputs must be approved to count in that month's salary. After the cut-off, HR finalizes the data and runs payroll. Inputs that arrive later are not lost; they are processed in the next month's payroll as an arrear or a recovery.
What happens to attendance after the payroll cut-off?
Days after the cut-off are usually assumed to be worked, and any absence or overtime in that window is adjusted in the next month's payroll. Late approvals for earlier days are handled the same way. The adjustment appears on the next payslip as an arrear if money is owed to the employee, or as a recovery if they were overpaid.