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Getting your money back if you happen to overpay an employee is not always easy. Even if you made a simple clerical error, or misinterpreted an award or agreement, there is a legal process to follow.

You can deduct pay if an agreement, award, law, court order, or the Fair Work Commission allows it. But if the deductions are for your benefit, they may be unlawful. If your employee then refuses to agree to repay the money, you would have to get a court order. The courts usually say recovery is available if you can show a mistake was made that led to overpayment. Recovery is not possible if the payment was intentionally made or the employee has already used the money in good faith.

Your best option to get the money back is to make an arrangement acceptable to you and your employee where you deduct small amounts from their pay over time. Always have a clear policy on overpayments in the employment contract and employee handbook, which says employees must report overpayments to their manager immediately.

Employsure will advise you how to legally approach overpayments. For peace of mind, please call our 24 hour Advice Line now on 1300 651 415.

Questions? Call us on 1300 651 415 to speak with a specialist

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