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Overpayment of wages

This guide for RCN members gives advice on what to do if you have been overpaid.

Employer reclaiming an overpayment of wages

An overpayment of wages can generally be recovered by the employer, therefore a person who benefits from an overpayment of wages is obliged to repay the excess. The statutory protection against unlawful deductions from your wages, contained in the Employment Relations Act 1996 and the Employment Rights (Northern Ireland) Order 1996, does not apply where the employer has made an overpayment of wages.

Under exceptional circumstances an employer may be estopped (meaning time barred) from recovering an overpayment under common law. In law, it is very difficult to successfully argue estoppel and any court case is likely to be unsuccessful.

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Agreeing repayment

In law, your employer is allowed to recover an overpayment from your wages in full, unless your contract or policy states that this is not allowed.

If you have been overpaid and are unable to pay the full amount back in one deduction, we recommend that you try to negotiate repayments in instalments. We would expect employers to act reasonably and agree to stage the deductions for repayment over a period of time.

It is important to check if your employer has a policy on the recovery of overpayments.

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What to do if you are overpaid

If you are told you have been overpaid, ask your employer (in writing) for a full breakdown of the overpayment including the dates they say the overpayment was made, and the amount of overpayment.

Check these details against your own records. If you agree that an overpayment has been made, you should discuss this with your manager and payroll department and agree a repayment schedule. You may need to provide a breakdown of your earnings (income and outgoings) to help in your discussions. Both sides should be reasonable.

Contact us on 0345 772 6100 if you are in dispute with your employer. We can put you in touch with RCN Member Support Services who can help you draw up a realistic financial statement, and offer advice on negotiating a repayment plan with your employer and any other creditors.

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Refusal to pay

If you unreasonably refuse to repay the overpayment and you still work for the employer, then in law they could take the money from your wages without your permission. If you have left the employer, they could bring a civil claim for recovery of the overpayment as a debt.

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Overpayment and 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 the tax and National Insurance.

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Employer has made wages error in your contract

If you have a contract of employment that clearly states your wages, then any 'overpayment' of your wages is usually a contractual issue. All the facts of the case will need to be assessed. Please call us to discuss this further on 0345 772 6100.

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