New retroactive payroll functionality available 7/7

Beginning July 7, 2025, new retroactive payroll functionality in Workday is available. This new functionality enables the use of an effective dated Costing Allocation for a retroactive pay period, instead of the Costing Allocation effective for the period they are paid in.

Why are we making this change?

This change helps reduce the need for Payroll Account Adjustments (PAAs) required to correct payroll posted with the wrong Costing Allocations.

It enables the posting of retroactive payroll with accurate budget dates, providing more visibility into retroactive payroll in reporting and PAAs.

Additionally, Effort Certifications will accurately include PAAs for retroactive pay.

The change takes effect on July 7, 2025, to accommodate the 2026 fiscal year.

Action needed ahead of this update:

To reduce the need for PAAs, it is strongly recommended that all prior Costing Allocations for periods including 6/1/2024 and forward be updated, if needed, so they are accurate when retro payroll is present. If updates are needed, the Create Payroll Accounting Adjustments reference guide contains step-by-step instructions.

The retroactive payroll enhancements from the first July 2025 pay cycle forward will use the allocations in the system for the relevant pay period. If costing allocations for retroactive pay periods are not accurate, a PAA will be needed to correct the payroll. Historically accurate costing allocations will result in the need for fewer PAAs.

For more information on Costing Allocations including instructions, and hierarchy and salary over the cap information, review the Assign Costing Allocations reference guide.

How does the new functionality work?

Review the following use case to learn more about how these changes function in Workday:

A worker receives a raise retroactive to 6 months ago. Their costing allocation was changed one month ago to 50% on a program, and 25% each on two grants. Prior to this change, they were paid 100% on the program.

With retroactive payroll costing functionality, the system will correctly allocate the first five months of pay 100% to the program and the sixth month to the new 50/25/25 allocation.

In the past, all would have been paid per the current 50/25/25 allocation resulting in the need for a PAA to allocate the pay correctly for the first five months.

Questions or concerns? Reach out at the Workday Service Desk.