When pay files are posted to the Documents tab in your Cocoon dashboard, you may see one labeled as ‘Adjustment’ in the type column. These files are critical tools that help us communicate changes related to leave dates, compensation, and policy shifts within your company. Keep reading for more details on how to read, understand, and use adjustment files!

An adjustment file is a payroll file that is provided to do just that–adjust an employee’s leave pay based on a change in circumstance. We generate adjustment files when there's been a modification to an employee's leave dates, compensation, or due to an employer policy change. These files help keep you up-to-date with all the shifts happening in your company's payroll, ensuring there are no surprises at the end of the pay period.

While there are numerous potential adjustments, some are more common than others. For instance, you might see adjustments due to changes in an employee's leave dates. In this case, the adjustment file will reclassify the type of pay for certain days (like changing from regular pay to paid leave), but the overall amount paid remains the same.

Each adjustment file includes a variety of columns, each detailing a specific aspect of the change. Here's a breakdown of the most important columns you'll see:

There are additional columns detailing specifics like annual salary, hours per pay period, leave start and end dates, and more, providing a complete picture of how the adjustment has been calculated.

Please note that adjustment files are not intended to replace regular payroll files. They are used to reflect changes in an employee's leave that occur after the payroll for a specific pay period has been processed. Our system is capable of identifying such changes and determining whether they affect pay.

In most cases, adjustment files will not impact pay; they mainly reclassify days from paid leave to regular days, or vice versa.

However, there are situations where an update to an employee's leave may affect their pay. This usually happens when there are changes to the number of unpaid leave days an employee has taken. For example, suppose an employee extends their leave beyond the coverage dates outlined in the employer's policy. If four days that were initially paid out as regular pay are now classified as unpaid leave, then the equivalent of four days' pay would need to be reclaimed, as they were initially paid in error.

In such cases, Cocoon will identify this change and its impact on pay, and will present a summary of these changes in the adjustment file. However, it's important to note that it is the employer's responsibility to enact these changes on their end.

No pay impact:

Let's take a look at an example: Say an employee, Peter, originally had four regular working days that were later reclassified as four paid leave days. In the Adjustment File, you'd see that four days of pay were added to the 'Leave Pay' column, while the same amount was subtracted from the 'Regular Pay' column. This results in a net zero change in 'Total Pay Owed by Employer', meaning the overall compensation for that period stays the same. Peter receives additional benefits in the form of paid leave, but no additional payments are required from the employer for the given pay period.

To see how these amounts were calculated please scroll to the right of the adjustment files. The blue columns show you a more detailed look of what is happening. Columns AQ - AS show you the total number of Regular hours, Regular days and Regular earnings that are getting reallocated to Paid Leave. This is indicated by the negative sign in front of the numbers. In this case we are taking away four Regular Days or about 28.89 hours worth of pay and reclassifying them to Unpaid Leave, as shown in the next image.

Columns AA - AC shows the same days that were originally paid under Regular Pay are now reallocated to Paid Leave.

Pay impact:

Now let’s say another employee, Amber, had 9 regular days reclassified to 9 days of Unpaid Leave. The yellow columns show you the change summary. Column I shows that the reclassification of regular days to Unpaid days resulted in a clawback of -$3,125. To see how this was calculated you can scroll to right and look at the blue columns. This shows a more granular view of what is happening.

Columns AQ - AS show you the total number of Regular hours, Regular days and Regular earnings that are getting reallocated to Unpaid Leave. This is indicated by the negative sign in front of the numbers. In this case we are taking away 9 working days or about 65 hours worth of pay and reclassifying them to Unpaid Leave, as shown in the next image.

Columns AH - AJ shows the same 9 work days getting credited to Unpaid Leave.

As a reminder, if you receive an adjustment file, Cocoon will identify and calculate the pay impact if there are any, but it will be up to the employer to enact these changes

Why does my adjustment file show zero change?

This usually means that an adjustment has been made, but it doesn't affect the total pay. For example, an employee's pay type might have been changed from Regular Pay to Leave Pay, but the amount remains the same.

What do negative values mean in the adjustment file?

Negative values typically indicate a deduction or decrease. For example, if Regular Pay is reclassified as Leave Pay, you'll see the regular pay decrease (negative value) and leave pay increase by the same amount.

How do I know what changes have been made?

The 'Adjustment Type' and 'Adjustment Notes' columns will give you a brief explanation of the changes made.