Holiday/salary overpayment.

[VictorianSqualor]

DP has just resigned from his job.
They are saying because he has taken however many days holiday (which he had to use as their paternity leave was so shite, but that's a different matter) and he won't be leaving until July 28th he hasn't actually accrued the amount of holiday he has used, and therefore will have taken 7.5 days more than he was allowed.

They say it's classed as an overpayment of his salary and are going to pay him around £500 less this month because of it.

It seems this is legal and the way it normally goes but my question is the way they take it.

Apparently the HR lady is saying they will take it off his NET wage this month, so he'll be paying tax on it, but I can't see how that makes sense, he has already paid tax on it when they paid him, why would he pay it again now? Should it not be in his deductions before tax?

bump

The gross amount should be deducted from his gross salary (which should broadly equate to the net amount being deducted from the net salary).

It is actually in the employer's interest to get this right as they will have paid Employer's NI on the gross amount to date, so won't want to overpay that.

That's what we thought, otherwise the tax is paid twice surely?

Well they definitely sholdn't be deducting the gross holiday wages from dh's net salary! Double whammy on both employer and employee.

He thinks maybe the hr woman has got it wrong and is going to get confirmation from payroll tomorrow.
After speaking to ACAS he needs to get his contract of employment (which he says he never got so is going to ask for a copy of their copy) because apparently his boss was trying to get him to sign something to agree about the overpayment and this is needed if not previously in his employment contract so it's possible they won't be able to take anything off him at all.

I would anticipate they should deduct 7.5 days gross pay from the gross salary he would have been paid, then tax him on the remainder.

Disclaimer: I am not by any stretch of the imagination any kind of payroll expert.

In terms of rights to deduct overpayment, I would be staggered if this wasn't already in the contract but you never know how rubbish some people are!

VS I had a thought and just checked it out. Deductions normally have to be agreed to beforehand as you've said. But that isn't the case where it's an overpayment of wages or expenses - no written prior agreement is necessary for that.

Payroll is by no means my area as I've said, and I don't know but my instinct would say holiday not accrued but paid could count as an overpayment of wages and therefore deducting it would be legal regardless of what the contract says or doesn't say.

It should be taken off before tax (gross), it is like flowery said, considered an overpayment of wages and so you are not due to it as you've not accrued it.

great thanks, don't mind not getting it, he had the days off after all, just don't want to pay tax twice!