Salary Overpayment Recovery Time Limit UK: An Employers' Guide

The salary overpayment recovery time limit in the UK is six years.

author

James Rowland

Commercial Director James leads Account Management, Sales and Marketing at Neathouse Partners.

Date

18 January 2022

Updated

11 July 2024
3 min read
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Salary Overpayment Recovery Time Limit UK: An Employers' Guide
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Salary overpayment recovery is the process of recovering money that has been accidentally paid to an employee in excess of what they are entitled to.
The salary overpayment recovery time limit in the UK is six years, but if you act immediately after discovering the error, you should be able to recover the money far sooner. This will depend on your communication with your employee(s) and whether they agree to make the process easy for you.

To help you get back the money your business has overpaid, here is everything you need to know about salary overpayment recovery.

Need advice about salary overpayment recovery? Get in touch with us today.

 

What is Salary Overpayment Recovery?

Salary overpayment recovery is when you mistakenly pay your employee too much and undertake the process of getting the money back. This could be a result of a mistake by your business, or if the employee has incorrectly reported their earnings.

The amount you recover will depend on how much was overpaid, and there is a six-year limit on salary overpayment recovery in the UK. This limit is set by law in the UK, and it's important to stick to this timeframe as recovering the money after this point can be more difficult. However, it's best to act as soon as you realise there has been an error so the process is quicker and simpler.

 

How Can You Recover the Money?

As soon as you realise you have made a mistake, you should start the overpayment recovery actions as soon as possible. This will usually involve:

Speaking to your Employee

The first step is to speak to your employee and explain the situation. This is important because you don't want to deduct the money from their next paycheck and leave them with financial or budgeting problems. You should outline how the mistake was made and how much needs to be repaid.

Showing Evidence They Were Overpaid

If your employee disputes the amount you say they were overpaid, you will need to provide evidence. This can be in the form of payslips, bank statements or P60s - anything that proves they were paid more than they should have been.

Agreeing on a Repayment Option

Once you have an agreement with your employee, it's important to come up with a repayment plan. This could involve them repaying in one lump sum or in instalments over a period of time.

The Advisory, Conciliation and Arbitration Service (ACAS) is an organisation that provides advice and support to employers and employees during disputes. In their guidance on salary overpayment recovery, they state that:

"If an employer has overpaid an employee, the normal procedure is for the employer to ask the employee to repay the amount in full. If the employee refuses or cannot pay, then the employer can make deductions from future wages."

Need advice about salary overpayment recovery? Get in touch with us today.

 

Employee Rights

When it comes to recovering salary overpayments, employees have certain rights which must be respected. For example, they cannot be dismissed or subject to disciplinary action for refusing to repay the money. Furthermore, they should not be victimised or have their hours reduced because they are in debt to you.

Whenever possible, it is always better to remain on amicable terms with your employees and try to come to a solution together that suits you both. This will hopefully help to avoid any disputes or hard feelings down the line.

If your employee can't repay the money in one go, they have the right to extra time to pay it back. This could be through a repayment plan that is agreed upon by both parties, or by working reduced hours until the debt is cleared.

Need advice about salary overpayment recovery? Get in touch with us today.

 

What if your Employee Refuses to Repay the Money?

If your employee refuses to repay the money, you have a few recovery options available to you:

  • You can take them to court - this is likely to be costly and time-consuming, so it's best only to consider this as a last resort.
  • You can try to compromise on a reduced repayment plan with them outside of court.
  • If the employee is planning to leave your company, you may be able to deduct the money from their final paycheck or from any redundancy pay they receive.

What if your Employee Refuses to Repay the Money?

 

Why You May Need a Lawyer

Although it's possible to recover salary overpayments without legal help, it may be advisable to hire a lawyer if your employee is contesting the overpayment recovery or is outright refusing to pay. Your lawyer will be able to advise you on the best course of action and help negotiate a repayment plan with your employee.

At Neathouse Partners, we have extensive experience dealing with salary overpayment recovery and can provide you with the best possible advice and support. Contact us today for a free, no-obligation consultation.

 

What if the Employee Has Left Your Company?

If your employee has already left your company, the first thing you should try is to reach out to them and ask for the money back. If they refuse, you may then need to take legal action in order to recover the money. This is likely to be costly and time-consuming, so it's best only to consider this as a last resort. If you do decide to take legal action, make sure you get professional advice first, as this process can be costly and time-consuming.

Need advice about salary overpayment recovery? Get in touch with us today.

 

Final Thoughts

The salary overpayment recovery time limit in the UK is six years but with the right advice and support, it's possible to get back what you're owed far sooner. The best way is always to try and come to an agreement with your employee so that the matter can be settled amicably. At Neathouse Partners, we have extensive experience in this area so if you have any issues, get in touch with us right away.

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