How to recover a salary overpayment

Some NHS staff at Milton Keynes University Hospital have been told to return Christmas bonuses that were paid to them by mistake.  If you make an accidental overpayment of wages or bonus can you recover it?

The hospital had operated a scheme between July and December 2022 where staff would receive a bonus in their December 2022 wages if they worked an additional five to ten shifts over those months. However, some staff who had not worked the extra shifts were paid the bonus in error.

If you’ve accidentally overpaid a worker due to an administrative error, you can recover that overpayment by making deductions from their future wage payments. Where the purpose of a deduction is the reimbursement of an overpayment of wages (which includes bonuses and commission), the statutory unlawful deductions from wages regime in the Employment Rights Act 1996 doesn’t apply. This means that you can make deductions from future wage payments without the worker’s consent, and it won’t be unlawful.  So, as soon as you identify an overpayment, notify the worker and set out your deduction proposals. If the total overpayment is a significant amount, make deductions over several pay periods to avoid causing the worker financial hardship – ideally, agree a repayment plan with them. Then, ensure you clearly include particulars of the deductions, and the purpose for which they’re made, on payslips. If the worker is no longer employed, and they fail to repay you the overpayment voluntarily, you’ll have to make a claim in the civil courts for restitution.  However, be aware that they may raise the defence of “change of position”. This can be relied on where they can show that, in good faith, they’ve significantly changed their position as a result of the overpayment, i.e. they’ve spent some or all the money, and so it’s unjust for them to repay it.  However, they can’t rely on the defence if they knew, or were put on notice, that they were being overpaid.

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