Anyone who runs a payroll each month will have experienced it. You’ve paid everyone for the month and the following week you realise you’ve made a mistake and some of the staff received more than they should have.
You’ve spoken to the relevant staff about it but you’ve now got a difficult meeting with your boss to explain what’s happened but you know he’s going to ask what you’re going to do about it so what do you do. Your understanding of the law is that you should be able to get the overpayment back from them so long as you still employ them, and your boss wants the cash back. However, some of the staff concerned have searched the internet and have told you that you can’t get it back in law as they have to agree to a deduction from the wages and they won’t allow it. So, whose right and what do you tell the boss? Well you’re both right.
From the employees point of view the law states an employer can’t make a deduction from wages unless its tax/National Insurance, or they have given you permission for it to happen. From your position you will usually be able to get genuine overpayments back from an employee either by deduction from future wages or by them reimbursing the company, so long as you are still employing them. If you pick up on the mistake weeks later and they have left the company it becomes much harder to get it back.
Avoiding a problem in the first place is always better than trying to rectify the situation afterwards. Ensure there are controls in place in the payroll systems to pick up on potential errors and miscalculations. Always get staff to sign a declaration giving you permission to make deductions from their pay. There are many potential deductions that can be made including staff loans, payments to the Child Maintenance and Enforcement Commission (CMEC), and payments to the local council for unpaid Council Tax.