Xero can occasionally have issues saving new Pay Items when some of the existing pay items have invalid setup.
In order to resolve this:
- In Xero navigate to Payroll> Payroll Settings> Pay Items
- Check all pay items to make sure every pay item has a valid expense account (i.e. the account is active and has a type of Expense). If not then update it to one that is.
- Be sure to click Show Inactive and also check/update these as required.