Overpayment of wages letter

As a general rule, you’re able to recover accidental overpayments of wages by making deductions from the employee’s salary. For this type of deduction, you don’t need the employee’s consent.

An authorised deduction

Occasionally, you may make a mistake with your payroll resulting in an employee being overpaid. This might be a one-off occurrence or it could happen with every weekly or monthly salary payment period and go back months or even years before it’s finally discovered. In general, you’re entitled to recover an overpayment of wages or salary made by mistake of fact, for example, a clerical or administrative error. Our letter explains how you intend to do this by making deductions from the employee’s salary and it covers the options of repayment by way of a single deduction from wages or repayment by way of a series of deductions from wages. Depending on the amount overpaid and the length of time before the error is discovered, it may be more reasonable to require repayment over a specified period of weeks or months rather than in one single lump sum. The best way forward is to try and agree a repayment plan with the employee. Employees cannot make a claim for unauthorised deductions from wages before an employment tribunal in respect of the recovery of overpayments, even if you don’t have the employee’s consent to the deductions being made. That said, it’s always better to request the employee’s authority to deduct the overpayment from their salary and to come to an agreement on this with them.