Should deductions for overpayment of wages be agreed in writing?

Q. ‘If we are making deductions for overpayment of wages, should this be written up and agreed in writing?’

Scott: This is, they think, lawful deductions from wages, but does that have to be done in writing before they take the deductions. Effectively, if it’s not got taxed, it’s generally got to be in writing before you make a deduction.

Seamus: Yes. The key thing would be to keep everything in writing in terms of what you’re doing. You have to have some sort of written communication with the employee in terms of if you’re going to make the deductions. Often, when there has been overpayments, and this is something that does happen with employers where there has been an overpayment to an employee, and certainly, it’s not acceptable to just say, ‘I’m taking all the money back next month,’ because that cuts down one what the employees’ obligations are financially. So you want to work with your employee in terms of that. Certainly, it is best practice that if you’re going to do that, there’s something in writing in place about it.

Scott: If they’ve just been overpaid, you could take it from them, but a reasonable employer would have a more reasonable way of saying, that’s not your money in the first place.

Seamus: Yes.

Scott: I was actually thinking there’s maybe been something here and the employer has to repay some money in that situation there or they were trying to direct it for something else.

Seamus: Yeah.

Scott: In that situation, because it’s not a lawful requirement to deduct tax for national insurance, where you don’t need that in writing, you just take it out, those ones in general do need something before you start the deduction. If you’ve given somebody a loan and they have to repay it, then you have to have the right to deduct in writing . . .

Seamus: You want the terms of the agreement written down, absolutely, and where you are going to make those deductions that you’re clearly setting that out and writing to the employee also and again, that it’s clear from any pay slip that they receive that that has happened.

Scott: Okay. We’ve got a quick one here just on sickness. We’ll come back to one or two other sickness things if we have a chance. We’ve heard this before, but just for clarification, “When does the accrual of annual leave stop whilst on sick leave?” So, employees get annual leave, they accrue for a period, so what are the rules around that? They’re European-led.