Overpayment of wages
Do you have to repay?
Generally yes, even if it is the employer/agency who has made the mistake, the money will need to be repaid. The statutory protection against unlawful deductions from your wages, contained in the Employment Rights Act 1996 and the Employment Rights (Northern Ireland) Order 1996, does not apply where your employer has made an overpayment of wages.
Some employers may put a repayment clause into your contract which applies should you wish to leave your job. This may relate to training costs or for international nurses, this pay also apply to relocation and recruitment costs. If you are asked to pay these costs see our repayment clauses section in our contracts advice guide.
Tax
You should only be required to repay the amount of overpayment that you actually received. It is down to your employer to make arrangements for the recovery of tax and National Insurance.
In law, your employer/agency is allowed to recover an overpayment from your wages in full, unless your contract or policy states otherwise. However, recouping an overpayment in this way is often not reasonable. For example: if you have been overpaid £100 a month over the last 6 months, it would not be reasonable for the employer to then deduct £600 from the next month’s salary. It could put you in financial difficulty and have serious consequences for your mortgage/rent and other outgoings.
We believe that employers should act reasonably and negotiate a repayment plan that is agreeable to both parties. In our experience, the majority of overpayment issues can be resolved reasonably without the need for RCN support.
If you are overpaid, follow these steps:
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Step 1: Ask for more time and detail |
Request that no deductions are made at this stage and check your contract and policies. Often large employers have an overpayment policy. Ask your employer in writing for a full breakdown of the overpayment including dates and amounts. Copy in your Human Resources (HR) team and payroll if you have them. You can do this using our Step 1 letter template. If your employer refuses to give you a full written breakdown, or has acted unreasonably, go to Step 5. |
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Step 2: Check the breakdown |
Once received, check these details carefully against your own records. Most employers will have a document that explains your pay slip; ACAS also have guidance. Read this and check. Do you agree that an overpayment has been made and do you agree with the amount owed? If ‘yes’ go to Step 3, if ‘no’ go to Step 4. |
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Step 3: If you agree, negotiate the repayment |
Often an employer will only accept a financial repayment but think about other options that might be beneficial, such as working an extra shift each week or staying later each day. The aim is to agree a repayment schedule that works for both of you. If your employer will only accept a financial repayment, consider your earnings and outgoings carefully. Work out what you can afford to pay back monthly and discuss this with the employer, HR and payroll. You may need to provide a breakdown of your earnings (income and outgoings) to help in your discussions. You can use our Step 3 letter template (with example). |
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Step 4: If you disagree, write again. |
If you disagree with the overpayment put this in writing to the employer/agency. Clearly state why you disagree and again ask for clarification. Ask again that no deductions are made at this time. If you are still in dispute after this attempt go to Step 5. |
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Step 5: RCN Support |
Most overpayment of wages issues can be resolved amicably. However if; • you are in dispute with your employer/agency ask that they still do not recover any amounts while you seek further advice and contact us for support. We can discuss the options with you. If the repayment plan is an issue, we can offer advice on negotiating a repayment plan with your employer/agency and any other creditors. |
If you unreasonably refuse to repay the overpayment and you still work for the employer/agency, then in law they could take the money from your wages without your permission. If you have left the employer/agency, they could bring a civil claim for recovery of the overpayment as a debt.
If you are thinking of refusing to pay then contact us for more advice. We can also provide debt advice if you need it.
If your employer has mistakenly put the wrong starting salary in your contract then any 'overpayment' of your wages is usually a contractual issue. All the facts of the case will need to be assessed. Please see our contracts guidance and contact us for more advice.
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Underpayment of wages guide
Page last updated - 15/12/2023
