Overpayments of salary and allowances procedure
Follow the procedure to recover or write-off of overpayments relating to salaries and allowances
Section 1 of the Wages Act 1986, re-enacted in Sections 13 and 14 of the Employment Rights Act 1996 allows an employer to deduct an overpayment from a workers wage (without the consent of that worker) where the purpose of the deduction is the reimbursement of overpayment of salary. The University will act fairly and reasonably in fulfilling the provisions of this legislation.
To minimise the impact of possible overpayments, staff are reminded that they have a responsibility to check payslips and advise the Payroll Office of any anomalies as soon as possible.
All overpayments should cease immediately when they are discovered and the member of staff will be paid at the correct level in subsequent payments. If the mistake is incorporated into the individual’s contract of employment the contract must be amended preferably by mutual agreement after consultation.
In cases where the amount overpaid is small, the recovery is to be made automatically with the member of staff being advised as a matter of courtesy. For the purposes of this procedure a small amount would normally be defined as 5% or less of gross pay in the period concerned. The agreement of the member of staff will always be sought for overpayments (of over 5% of gross pay in the period concerned) and the details of any agreement will be evidenced in writing or by email. The recovery period of an overpayment (of over 5% of gross pay) will normally be the same as the period over which the overpayment occurred. Recovery in excess of this period should be authorised by the Payroll Manager or the Human Resource (HR) Manager.
In exceptional circumstances overpayments can be written off, in part or in full:
write offs for overpayments which are in excess of £100 require the approval of the budget holder and either the Director of Human Resources, Deputy Director of Human Resources or the Deputy Director of Finance,
write offs for overpayments which are less than £100 require the approval of the budget holder and either the HR Manager or the Payroll Manager.
This procedure will only be initiated once it has been established that an overpayment has been made.
Procedure for the recovery of the overpayment of variable and contractual items
"Variable items" are those which are paid as a one off on a monthly basis upon the submission of a claim by a member of staff. The claim needs to be authorised by the Department before a payment can be made. Examples include claims for casual hours, overtime and expenses.
"Contractual items" include salary and may include other allowances as defined in the contract of employment.
Current members of staff
Where an overpayment has been made which is 5% or less of gross pay in the period concerned, Payroll will automatically make the recovery the following month. In advance of the recovery being made, the member of staff will be advised that an overpayment has occurred and that recovery will be made as part of the next available payroll run.
Where an overpayment over 5% of gross pay in the period concerned has been made, the member of staff concerned will be written to and advised of the details of overpayment and a proposed repayment plan. It may be necessary to have a meeting to discuss the repayment options. Details of the agreed recovery plan will be confirmed in writing and copied to Payroll and the reporting manager. Payroll will commence salary deductions as agreed and HR will make appropriate adjustment to the member of staff’s record if necessary. If the individual fails to respond to any correspondence or fails to agree to a recovery plan within the general principles above, then a letter with details of a proposed repayment plan will be issued and the individual will be given 15 working days to respond. If there is no response from the member of staff, then salary deductions will commence.
Former members of staff
Where an overpayment is identified within a reasonable period after employment terminates, a letter will be sent by the HR Manager to the former member of staff detailing the background to the overpayment and seeking recovery of the net amount. This will be copied into Payroll and the reporting manager. If agreement can be made for the recovery of the overpayment, the former member of staff will be advised to make their cheque(s) payable to ‘University of Bath’ and sent to Payroll.
If within one month of being notified of the overpayment, the former member of staff has failed to respond or agreement cannot be reached within the general principles, Payroll will automatically issue an invoice. The invoice will be issued under normal repayment terms (30 days) and recovered following normal credit control procedures.