Payroll through Xero

Work out pay in Mployr and lodge it with the ATO through Xero - what to do each pay run, and what to keep in step.

Overview

When your business sends its pay runs to Xero, Mployr works out the pay - awards, timesheets, leave and super - and Xero lodges it with the ATO through Single Touch Payroll when you post the run there. Xero builds its own payslips from what it's sent, so each pay run is paid, has its payslips sent and is lodged from one place: Xero.

Super guarantee is always Mployr's figure - where Xero works out a different amount, Mployr's replaces it. PAYG depends on PAYG withholding in Sending Pay Runs to Xero on the Xero connection: with Xero calculates it (the default) Xero withholds from the tax declaration it holds, and a figure that differs from Mployr's stops the send at Needs review; with Mployr's figure is lodged, Xero withholds and reports Mployr's amount.

Setting up the connection is covered in the Payroll guide under Sending a Pay Run to Xero.

Before Your First Pay Run

Check these in Xero:

Payroll is connected to the ATO for Single Touch Payroll
Every employee has what STP Phase 2 needs - their employment basis, income type and tax details
Everyone is on the right pay calendar
There are no draft pay runs left over
The pay calendar's next period is the first period you'll pay from Mployr
Each leave type is set up, and there is an earnings rate for public holidays

Every Pay Run

Build, check and finalise the pay run in Mployr. It's sent to Xero automatically

Wait for the Xero panel on the pay run to say Sent. If it says Needs review, check the differences it lists - accept them, or fix the cause and click Send again

In Xero, open the draft pay run and check the payment date. Remove anyone who isn't in Mployr's pay run - Xero adds everyone on the pay calendar and would pay them from their Xero pay template. The Xero panel warns you when this happens
Post the pay run in Xero. Posting it lodges it with the ATO
Pay your employees and send their payslips from Xero

What Mployr Holds Back

So that what employees are paid, what their payslips say and what the ATO is told all match:

Download ABA and Email All Payslips aren't offered on a pay run that goes to Xero, unless its Xero panel says Sent - Mployr and Xero then hold the same figures. Emailing one payslip is held the same way

Your employees don't see the payslip in Mployr - its link, the app or the Your payslip is ready notification - until the Xero panel says Sent. Until then the link says their payslip comes from Xero, and the notification goes once the run is Sent

Submit STP isn't offered on a pay run that goes to Xero - Xero lodges it when you post it

Pay runs, timesheets and leave aren't imported back from Xero while Mployr sends them there, because Xero's copy would be written over Mployr's

Pay runs paid before the First pay run to send date on the Xero connection aren't sent to Xero - those periods were paid and lodged by your previous payroll system

Keep Xero in Step

Make every pay rate, bank account and tax declaration change in Xero as well as in Mployr. Changes made in Mployr don't reach Xero for employees who came from Xero
Approved leave reaches Xero as a leave application within the hour. A cancelled leave request doesn't - cancel it in Xero too
Process terminations in Xero, outside the Mployr pay run. A pay run with termination pay in it isn't sent to Xero at all

Common Issues

The Xero panel says Not sent

Open the panel to see why - usually a pay category with no matching Xero earnings rate, an employee not paired with their Xero employee, a draft for another period already in Xero, no Xero pay calendar chosen where there's more than one to choose from, or a run mixing two pay cycles that go to different calendars. Fix it, then click Send again.

Download ABA isn't there

The pay run goes to Xero and its panel doesn't say Sent. Pay the run from Xero.

In this guide