Overpayment of wages repayment receipt letter

Where an employee or ex-employee has been repaying an earlier accidental overpayment of wages, once they’ve fully paid off their debt you can use our letter to confirm that.

Current employees

Where there’s been an accidental overpayment of wages to an existing employee, say due to an administrative or clerical error, you’d normally seek to recover that by way of a deduction, or a series of deductions, from their future wages - see our Overpayment of Wages Letter. The Employment Rights Act 1996 says that a deduction from wages that relates to recovery of an overpayment of wages doesn’t count as an unauthorised wage deduction, even if you don’t have the employee’s consent to the deduction being made. That said, it’s always better to try and agree a repayment plan with the employee. If the overpaid sum is small, only one wage deduction might be needed, but where the total amount of the overpayment is significant, you should arrange for a series of wage deductions to be made so as not to cause the employee any financial hardship.

Former employees

With ex-employees, as the overpayment can’t be recovered by making a wage deduction because they’ve already left your employment, you need to ask them to agree to pay the money back – see our Overpayment of Wages Letter for Ex-Employee. Again, this might involve a single repayment or a series of repayments, depending on the amount of the overpayment and the ex-employee’s ability to pay. If they refuse to repay the overpayment, you’d then have to issue proceedings for recovery in the civil courts if you’re not willing to write off the debt.

Repaid debt

Once the employee, or ex-employee, has fully repaid you what they owe, you can use our Overpayment of Wages Repayment Receipt Letter to acknowledge this in writing and to confirm that you therefore now regard the matter has closed. Our letter has four alternative options:

• repayment of a small overpayment by a current employee by way of a single deduction from wages
• repayment of a small overpayment by way of a single direct payment - this is mainly for ex-employees but could also apply to a current employee if they arranged a one-off bank transfer
• repayment of a significant overpayment by a current employee by way of a series of deductions from wages, with the final deduction in the series now having been made
• repayment of a significant overpayment by way of a series of direct payments, with the final instalment in the series now having been paid - again this is mainly for ex-employees but could also apply to a current employee if they arranged to pay the debt by direct debit rather than through deductions from their wages.