How to - Manage overpayments

We aim to ensure that all salary payments are processed accurately and timeously. However, it is recognised that occasionally overpayments in salary may occur, for example, due to administrative errors or errors in claims for allowances and expenses.

The Recovery of Overpayment Policy aims to provide a fair and consistent method for dealing with the recovery of overpayments in salary.

Table of contents

Identifying an overpayment

Once an overpayment has been identified (identifying overpayment) you should establish, in consultation with Payroll:

how the overpayment has occurred
the total value of overpayment
commencement date of overpayment
employees normal (net pay), and
the net amount to be repaid once deductions for tax and NI contributions are considered

Notification of overpayment

You should email Payroll at payroll@falkirk.gov.uk setting out the details of the overpayment and asking them to cease it with immediate effect. The following information needs to be included in the password protected document:

employee name
employee payroll number
period when the overpayment occurred
total/monthly amount of overpayment
your contact details

You should also notify the relevant Chief Officer.

At the same time, you should advise the employee that an overpayment has occurred and that you will arrange to meet with them to discuss the repayment.

Meeting with the employee

You should, in consultation with Human Resources, arrange a meeting to discuss the overpayment with the employee concerned (Use the intranet search function for - Overpayment Meeting Invite Letter). The employee may be accompanied at this meeting if they wish.

You should advise the employee of the overpayment, the reason for this, the amount and period over which this has occurred. You should also advise the employee of the Council's right to reclaim the overpayment as detailed in the Statement of Particulars.

Methods of reclaim

The method of reclaim will depend upon the level of overpayment.

If the overpayment is small, then the full amount should be reclaimed from the next pay period. A small overpayment would normally be where the overpayment has only occurred over 1-3 pay periods and the total amount is for approximately 10% or less of an employee's gross pay for a single pay period. In such cases, payroll would normally contact the employee directly to arrange recovery.

If the overpayment is significant in relation to an employee's pay, you should attempt to agree a programme of repayments. The overpayment should be reclaimed over a suitable period, to minimise causing financial hardship.

The period of reclaim should be as short as possible, but what is reasonable will depend on the size of the overpayment and the period over which this occurred. Generally, this will be reclaimed over the same period as the period of overpayment.

Where an employee has indicated that they are in financial hardship, you should remind them of the availability of the Debt & Welfare Benefits Advice Service offered by Community Advice Services, and of the Employee Assistance Programme.

Agreement reached

On reaching agreement, you should write to the employee setting out the proposed deductions schedule, that is the amount and the frequency of deductions and for how long the deductions will be made (Use the intranet search function for - Confirmation of Agreement of Repayment Letter).

You should ask the employee to sign authorisation of the deductions schedule and return it to you within a week of the receipt of the letter.

You should forward the password protected acceptance of the signed schedule to Payroll at payroll@falkirk.gov.uk in order that they may action this payment schedule.

Agreement not reached

If, following discussions, no agreement can be reached recovery can still proceed under the terms of the individual employee's conditions of employment.

You should therefore determine a reasonable repayment period and confirm it in writing to the employee (Use the intranet search function for - Confirmation Of Repayment (No Agreement)).

You should email Payroll at payroll@falkirk.gov.uk to advise of the method of reclaim. The following information needs to be included in the password protected document:

employee name
employee payroll number
details of repayment
your contact details

You also need to attach the copy of the letter sent to the employee (password protected)

Exceptional circumstances

Any decision not to reclaim an overpayment (exceptional circumstances), or only to reclaim part of the overpayment, should only be taken following a balanced assessment of the likelihood of full or partial recovery and in consultation with Human Resources.

Where it is not considered appropriate to reclaim monies overpaid, the following action should be taken.

Abatement of less than £5000

Following consultation with the Director of Transformation, Communities & Corporate Services, the relevant Service Director/Chief Officer should write to the Chief Finance Officer seeking approval for the abatement. This should detail the background to the overpayment, including appropriate evidence supporting the results of the assessment not to reclaim/to abate repayment.

Falkirk Council

How to manage overpayments