Late last year, Julian was kindly invited by Principea Ltd to co-present a session at the Payroll World Autumn Conference on the rather thorny issue of employers recovering overpayments. Here’s a brief overview of what he said.
Firstly and most importantly, get a policy and protocol in place, this protects you and helps the employee to understand the ground rules. As an ex Trade Union official I know that many, many people simply don’t realise that employers are legally allowed to recover overpayments in the first place.
Second – employers work in gross – employees work in net. So when you sit down to talk to them (& believe me, that’s a better way to approach this issue than writing), make sure you have the net figures to hand; this makes the potential debt seem a lot smaller and therefore repayment more manageable.
Third, seek a mutually agreeable repayment plan. Some big organisations for instance refuse immediate pay-back while they work it all out and issue an invoice, only to find out that the employee has then spent some of it and so the debt takes longer to recover.
Fourth, trust your staff, I’ve heard of some organisations who treat every failure to disclose an overpayment as an integrity issue. Not everybody reads their payslips and staff may genuinely not notice an overpayment (This means they may well have missed underpayments too!) especially those in the hospitality or care sectors where a multitude of variable payments means their pay can go up and down by 20 or 30% every month. Lots of people run over their overdrafts and your money may have just made their bank very happy but this means they just don’t have immediate access to a pot of cash to pay you back.
Handling an overpayment badly can ruin your relationship with a member of staff, be clear that it was a mistake and that you have the right to recover it. But, at the same time, be sensitive and understanding in your conversations and, if necessary, with your repayment schedules.
If you want Care HR to help you develop an overpayment recovery system – Contact us