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A payroll entity is where a user is paid from. Think of a payroll entity as a payroll application. A user might work across multiple sites and payroll entities within an organisation, but they are paid from one payroll entity.
If your organisation has multiple payroll entities (e.g. multiple payroll accounts) you might need to change the user payroll entity so they are paid from a different payroll account.
When a new user is created for the first time, if they are assigned to a role during the new user process, their payroll entity will be automatically assigned based on the role you have assigned (e.g. where the role is located). If you assign a user to multiple roles across multiple payroll entities, the system will assign the first payroll entity in the list. Therefore it might need to be updated if it is not correct.