What are an employer's options if they overpay an employee's final pay packet?Posted in : Seamus Says - Employment Law Discussion on 4 May 2018 Issues covered:
Q. ‘What can an employer do if there is an overpayment on an employee’s last pay before they leave the organisation?’
We had a case similar to that recently where the employee had signed an agreement with the employer in terms of examinations that have been carried out that the employer had paid for. There was a clawback provision within the contract. The employee was just making the decision to leave Northern Ireland and move over to England. But there was a substantial amount of money that would have been owed at that point and the employee would say, ‘We’re just deducting it from your wages,’ which was leaving this employee with around a few pounds of a salary.
That was the panic because everything was going to be so much more expensive. What we did, we looked at it and we did our best, but ultimately, the employer contractually had a right to do it. It was set out in writing. It did seem unfair from my client’s point of view, but the law is with the employer in terms of deductions for overpayments.
Scott: Well, the trouble is if the employee goes, how do you get it back? You have a contractual right to get anything overpaid but you’re not getting money coming in because the employee has gone.
Seamus: You lose all contact at that point, out of sight, out of mind, as sometimes can happen with employees whenever there’s money and maybe a new life somewhere else and it’s the last thing on their mind and even trying to set up things like direct debits and payments into the bank don’t always work because they’re very easy to stop.
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