Can employers automatically deduct overpayment of wages

2014-12-01 Jennifer Renney-Butland posted:

If an employee has been overpaid, is the employer entitled to automatically deduct those monies from their next salary payment?

The law clearly states that deductions from wages can only be made where the law provides for it (such as tax contributions or a court order), where a contract of employment permits it, or the deduction has been specifically agreed in advance between the employee and employer.

It is a common employment law myth that employers can never recover any accidental overpayment of wages unless the contract of employment says so or an agreement is in place. This is because the law excludes overpayments made due to a mistake of fact, such as an input error on payroll. Therefore employers could recover overpayments from future salary payments without first informing the employee.

Employers should not simply help themselves to a reimbursement from an employee’s next pay packet. It is good practice for an employer to write to an affected employee, explain to them about what has happened and how they intend to rectify the situation.

However, if the overpayment is due to a mistake of law, such as the employer made a payment when they were not legally obliged to, the employer will need the employee’s permission to recover the monies if there is no right of recovery in the contract of employment.

If you require assistance with deduction of wages, then contact Renney and Co Employment Solicitors today for fast effective relief on 01225 632240 or at info@renneyandco.com.

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