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UpdatesDec 01, 2010

Can you make staff repay amounts you have overpaid them?

Can you believe it’s December already?

Pretty soon, it will be time for manic last minute Christmas shopping and catching up with friends and family over turkey and pudding – not to mention ringing in 2011!

My, this year has flown, and it’s no wonder…

By Charles Power

Dear Reader,

Can you believe it’s December already?

Pretty soon, it will be time for manic last minute Christmas shopping and catching up with friends and family over turkey and pudding – not to mention ringing in 2011!

My, this year has flown, and it’s no wonder…

Adjusting to the changes made by the new Fair Work Act has been no mean feat, and things aren’t set to slow up in 2011 – there are plenty of changes to employment laws slated for the New Year.

Because of this, the Employment Law Practical Handbook team is busy finalising topics for your 2011 updates.

We have our list – which includes chapters on issues such as performance management and workplace bullying – and now, we want your suggestions.

I’d love to hear your suggestions!

Until next time…

Claire Berry

Claire Berry
Workplace Bulletin

And now over to our Editor-in-Chief Charles Power…

Can you make staff repay amounts you have overpaid them?
By Charles Power
Editor-in-Chief, Employment Law Practical Handbook

During the past week, I got an interesting question from a subscriber about overpayments made to staff, so I thought I’d share it with you today…

The question was this:

Thanks to a computing error, I have made overpayments to some of my staff. Can I make them repay the amounts?

So what is the answer?

Well, for starters, it depends on whether you have overpaid your current employees or your former employees.

Even though both current and former employees would legally have to pay you back the money if you demanded it, the process isn’t as straightforward as it may seem…

1. Current employees

If you have overpaid a current employee and they owe you a debt, you do not have the right to deduct the debt from their contractual payments or statutory entitlements (i.e. superannuation, annual leave amounts, etc.).

However, the employee can authorise you to deduct the amount of the debt from their net salary payments. It is important to do this to ensure that you do not infringe on their statutory entitlements such as superannuation and annual leave, etc.

In order to get this authority from an employee, you will need to write to (or email) them and advise them of the following things:

You should give the employee the option of repaying the debt directly by cash, cheque or EFT or by authorising you in writing to deduct the debt from the net amount of their next salary payment.

If an employee refuses to give you their authority, you are prohibited from unilaterally deducting the amounts. Instead, you will have to institute legal proceedings against them to recover the debt.

2. Former employees

If you have made an overpayment to a former employee, you will need to write to them and inform them of the debt. In this written communication, you should also request repayment of the debt within a specified time period (28 days would usually be reasonable) and advise the employee of their payment options.

If they do not repay the debt within the specified period (or refuse to repay it) you will need to institute legal proceedings against them in order to recover the debt.

Regards,

Charles Power

Charles Power
Editor-in-Chief
Employment Law Practical Handbook

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