Overpayment notification letter template

As soon as an overpayment is identified, you should take action as possible. This would involve raising the issue with the employee to explain how you intend to recover the money, usually by deducting from the employee's future salary payments until the amount is paid off.

Here are some UK employment legislation considerations to keep in mind when implementing an overpayment notification letter:

• Under the Employment Rights Act 1996, employers must ensure that any deductions made from an employee's pay are lawful and do not take the employee's pay below the national minimum wage.

• Employers must follow the principles of natural justice and fairness when dealing with overpayments. This means giving the employee an opportunity to respond and challenge the overpayment before any deductions are made.

• The letter should include clear and concise information about the amount of the overpayment, the reason for the overpayment, and how the employee can repay the amount.

• Employers should be aware that some employees may have the right to set off the overpayment against any money owed to them by the employer. This should be taken into account when calculating any deductions.

• If the overpayment is due to an error made by the employer, the employer should consider waiving the overpayment if it would cause financial hardship to the employee. However, if the overpayment is significant, the employer may need to recover the overpayment to avoid a loss to the business.

• Employers must keep accurate records of any deductions made from an employee's pay and provide a payslip that clearly shows the amount of any deductions.