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Jun 14 2019
Credit Control

Recovering overpaid wages

Even in the most well-run companies, errors in payroll accounting are possible, resulting in employees receiving more wages than they are owed. When this happens, it is important that employers know how to deal with the recovery of those overpaid wages in the correct way, to avoid any legal disputes arising. An employer is entitled to reclaim the money, but there are right and wrong ways to do so.

 

Contracts

One way to avoid any bad feeling is to draw attention to the ‘overpaid wages’ section of an employee’s contract when it first gets signed. Doing so at this early stage means expectations are managed right from the beginning, and it will ensure your employees know they will be required to pay back overpaid wages when they occur.

 

The legal standpoint

Employees are legally protected against unfair wage deductions by the Employee Rights Act of 1996, but overpayment is not covered by this. As such, employers are within their rights to take money from an employee’s next wage packet to rectify any overpayment. Some employees may not be aware of the rules pertaining to repayment of overpaid wages, so it is a good idea to warn them before deducting the amount owed from their next month’s wages.

 

Large sums

With a small error involving a minor overpayment, recovery is usually pretty simple. But with larger errors, or those that have been going on for some time, the sum could be much more significant. In such cases, taking the full repayment at once is unlikely to be a realistic solution, and a payment arrangement will be a better option. Once terms are agreed, this type of issue can usually be resolved amicably.

 

Using a debt collections agency

If you’ve got to the point where legal action is required, you have 2 options. You can pursue the debt through the civil courts, which can take a long time and a lot of resources, or you can take the simpler option of hiring a professional debt collection agency to recover your losses. First Capitol Collections can help you resolve this type of situation with as little fuss as possible, so contact us to make arrangements and find a solution.

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