Please help! Salary overpayment

[Ellypoo]

Hi all

I manage payroll for my company (use an agency but I send all the details across etc).

So, we run a nursery voucher scheme with salary sacrifice.

One of our members of staff had placed an order for vouchers to end last Feb (2012), so we stopped taking the salary sacrifice from March. We have had no further orders from him.
On looking at the annual salary review last week, we have discovered that the nursery vouchers people have continued sending him vouchers & invoicing us for them for the whole year, which means that we have overpaid his salary by 10 months of £243.

As soon as we discovered this (my fault for not checking the details from the voucher people, but also they shouldn't have extended the voucher period without my knowledge), I contacted the employee - he had called them to extend the vouchers, but no paperwork or confirmation request had come through to me. I said to him that we need to work out a schedule to reclaim this money that had been overpaid to him - he said he was really p*ssed off that it had been missed - I did point out that if my pay packet was £200 higher one month than the previous one then I certainly would have noticed it and pointed it out/queried it! He refuses to take any responsibility - fair enough, it was my fault, but at the time I wasn't fully concentrating on my work as I was still on maternity leave having lost my DD.

Anyway, I have suggested that we take 1 months worth of nursery voucher under payment each month, in addition to taking the standard amount. This would take 10 months to clear the debt to us.

He has just come back saying that he can't afford that, the most he can afford is £80, including for this month (which I have already prepared the payroll for, having agreed with him previously that we would take 1 additional payment this month, so have gone ahead and arranged that).

Where do we stand? At £80/month, it would take over 2 years to clear the overpayments, which I think is unreasonable.

Any ideas please? TBH I'm really pissed off that he didn't notice that he was receiving so much more from March onwards than in Jan & Feb!

[hermioneweasley]

Aren't the voucher company liable if they didn't follow the proper authorisation? Why did he go to them directly? What is your normal procedure?

If not, I think your suggestion is fair.

[Forester]

I don't think it's unreasonable for it to take a longer period of time to repay than the length of time the overpayment took place. Maybe compromise and agree repayments over 20 months?

[Ellypoo]

The procedure is for any changes/amendments/orders or cancellations to come through me, to avoid exactly this situation!

Will see if he will compromise - I have already told him exactly what his net pay will be this month, having deducted 2 payments (1 standard & 1 'back payment), and it's not much less than it was last Feb when he was paying the normal amount.

[MustafaCake]

Hello, HR person here!

There is no "rule" about the rate of recovering overpayments (ie whether this should be in one lump sum or over a period of x months).

However, to comply with the law, an employer must not act in a way that underminse the employment relationship or breaches trust and confidence. Therefore the best advice for an employer is to discuss the overpayment with the employee and propose repayment over a reasonable period of time depending upon the size of overpayment and the period over which it occurred.

Now if this chap is adament he can only afford £80 a month and he says that paying any more would cause him financial hardship then I would advise you to go with the £80 a month. Make sure you put the agreement in writing and get him to sign it.

[GlaikitFizzog]

Surely you have procedures in place regarding recouping overpayments? What does yr manager say or y HR advisor??

Tbh he has a cheek to say he didn't notice, because its salary sacrifice it should be detailed on his payslip as a deduction.

What are the voucher people saying to their error in not following procedure?

Have y pointed out that it won't be £243 he'll be short because that deduction is before tax and NI is taken into account. What is his exact over payment for the 10 months? Look at that and then see what is an acceptable repayment amount

Don't get into a battle of "I would notice", "it's not much less than last February". Get the mistake corrected as best you can, and tighten up the procedures surrounding the deductions to make sure this doesn't happen again. Your balance sheet must not balance, I find it hard to believe it has take so long to pick up on.

[GlaikitFizzog]

Sorry, that sounds like I'm having a go at you. I'm not, I used to work in payroll where every single month we were audited by the finance manager and had to back up anything that had changed from the previous month.

[Ellypoo]

Thanks Mustafa.

I am just about to advise him that by paying 1 months missed salary sacrifice payment each month, he will only be 'down' less than £80 each month, from what it would have been had he been paid correctly last year.

I'm really annoyed that he breached the procedure & went directly to the nursery vouchers provider, and that they didn't contact me, also that he didn't question when his salary increased by over £200 in one month. I know it's ultimately my fault, I'm just pissed off that it has happened.

Will see if we can come to some arrangement. I am assuming that if he were to leave, that we would be able to deduct the outstanding amount owed from his final salary payment? We do have a deductions clause in the contacts of employment.

Thanks for the advice everyone!

[Ellypoo]

I am the Finance Manager & in charge of HR - early last year was very hard for me personally, which I obviously let affect my work (I was on maternity leave but using KIT days to run the payroll and other essential things). Salary sacrifices go through our P&L, not balance sheet, so there wasn't anything out of 'balance' so to speak.

We are a relatively small company, so any previous overpayments have been discussed and dealt with on an individual basis - I can't even remember when that was though, I am normally very much on the ball!

[GlaikitFizzog]

Oops, sorry ellypoo! I completely understand I've done small payrolls and payrolls with 1000s of employees and by far the most hassle comes from the small payrolls!

I think it's best to be open and honest. Present the employee with all the information and see where that leaves you.

But I would go to town on the voucher people for not following procedure, and consider changing suppliers.but then I'm arsey like that! :)

[Ellypoo]

I can be quite arsey too glaikit if necessary!!! I will bear that in mind and will get in touch with them to find out how/why they managed to do this - I could probably get a cheaper service charge from a different provider too!!!

I have been open & honest with the employee, will send him a couple of options and let him decide which suits him best.

[didireallysaythat]

I think the employee has to shoulder some of this !

We had the reverse happen - my husband didn't check his pay slips for a year or more so didn't realise his payroll dept had stopped childcare sacrifice for no reason. The nursery kept on billing us like they had been receiving the payments. Then they realised we owed them more than £3000 ! Took us 2 years to pay off the nursery and without the tax benefits.

On the bright side, my husband ALWAYS opens his pay slips now...