Every week in our Money blog, we answer questions about your financial problems or consumer disputes. This week, a reader asked what they have to do if they are overpaid.
Debbie asked: “I work as a chef for a high-profile hotel. In August I was overpaid by £560. I’ve spoken to a colleague who said it happened to them last year, they kept it and nothing happened. Am I allowed to keep the money?”
We spoke to Alison Colley, managing director and solicitor at Real Employment Law Advice, about this one – and it’s bad news if you were planning to pocket the cash.
She says if you’ve been overpaid wages and are aware – or even just suspect – that it’s an error, you should notify your employer as soon as possible, regardless of what has happened with colleagues in similar situations.
“This should be done in writing, and you should not spend the money until you have received confirmation in writing from the employer that you can retain the money,” she says.
“If an employee keeps the money, knowing it has been paid to them in error, and says nothing, there is a high probability that when the employer does find out the mistake that they will want the money to be repaid, and if an employee is still employed it will be deducted from future wages.”
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Onus on employee
Alison says she often sees employers contacting employees and former employees several months, even years, later to recover the money when an overpayment comes to light.
Unless you received the money with the genuine belief it was correct, or you were led by your employer to believe it was correct, she says there is “little that can be done” to defend their claim for the money back.
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“If an employee or former employee refuses to voluntarily repay the money, then the employer can make an application for a county court judgment and demand repayment of the money as a debt,” Alison says.
“It can be tempting to keep the money and stay quiet, but the best course of action is to raise it with the employer and get the pay corrected as soon as possible.
“We would also urge employees to check their payslips carefully and the money that is paid into their bank account, as ignorance to the error is also no defence. The onus is on the employee to check and make sure their pay is correct.”
This feature is not intended as financial advice – the aim is to give an overview of the things you should think about. Submit your dilemma or consumer dispute via:
