Overpayment of wages

Confirm the mistake before asking for money back

An overpayment happens when payroll pays more wages than were due, perhaps because a pay change, absence or leaving date was entered late. Employers can usually recover an accidental overpayment, but the first job is to prove the amount.

Check the affected pay periods, the correct gross pay and the deductions already reported. Work out how payroll will correct tax and National Insurance rather than asking for the difference between two headline figures. The Acas overpayment guidance recommends contacting the worker as soon as the mistake is found.

Agree a repayment that is workable

Explain in writing what happened, how the balance was calculated and how the correction will appear in payroll. Talk to the worker before taking money back. A small recent error may be manageable in the next pay run, while a large or long-running overpayment may need instalments.

Being entitled to recover money does not make an unaffordable deduction good handling. Consider the worker's circumstances and avoid turning one payroll mistake into a second problem.

Handle leavers and disputes carefully

If the person has left, contact them with the same calculation and proposed repayment route. Do not invent a final-pay deduction after the final pay has already been issued. A court claim may be an option if repayment cannot be agreed, but it is not the first step.

This term concerns accidental wage overpayments. It does not cover a benefit overpayment, an agreed wage advance or an employer loan. For Northern Ireland, apply the separate nidirect pay-deduction rules.