Overpayments Procedure

Transcription

1 Overpayments Procedure INTRODUCTION 1.1 Overpayments of pay and expenses happen occasionally and for various reasons. 1.2 Preventing overpayments is a joint responsibility. Both TSC/Payroll Section and individual departments are responsible for correctly calculating and inputting employee payment and expense details. The employee is responsible for correctly completing and submitting their pay records on time. Employees must check their payslip and report any errors direct to TSC/Payroll Section immediately. PURPOSE 2. This policy covers arrangements for the recovery of overpayments to Derby City Council employees and ex-employees. The policy covers both overpayments of pay and expenses. SCOPE 3.1 This policy applies to all employees and ex-employees of Derby City Council, including casuals. 3.2 Directors and Assistant Directors are empowered to make reasonable and considered decisions within the overall framework. RECOVERY 4.1 In all cases of overpayments, an employee s employment record will be amended so as to rectify the overpayment at the earliest opportunity to prevent any further overpayments. 4.2 The employee will be notified immediately by TSC/Payroll Section or HR. A letter with a breakdown and recovery form will be sent to the employee. We will normally seek to agree repayment in the form of two options: recovery at a minimum rate of 12% of the gross payment the employee would receive each pay period, or recovery over the same period of time the overpayment occurred until full payment has been re-paid. 1

2 4.3 The letter will contain a 14 day response time. If no reply is received within the 14 days then automatic recovery will commence using whichever of the above options is the lesser recovery amount. This will begin in the employee s next pay period. 4.4 In cases of bulk overpayments, for example, where there are two or more individuals, and they have been overpaid as a result of an error emanating from the same source, these may be treated as individual cases. 4.5 In the cases where the overpayment is less than 12% of the employee s gross salary for each pay period, or the overpayment occurred in one pay period, the employee will be informed that the overpayment will be automatically deducted in their next pay. 4.6 Where the employee is informed of the overpayment on or before their payday, the overpayment will be automatically deducted in their next pay. 4.7 All underpayments of pay will be paid in full. Where there is an overpayment and an underpayment one will be offset against the other as appropriate. 4.8 Recovery of overpayments and the arrangements associated with the process will be applied in a timely way in order to ensure that the monies are recovered quickly and efficiently, and to minimise any anxiety caused to the employee. RECOVERY AFTER DEATH 5. Recovery of overpayments after the employee s death will not normally take place. CASUAL EMPLOYEES 6. Where a casual employee is overpaid the employee concerned will be notified detailing the amount of the overpayment, the circumstances that have led to the overpayment, and the options available for recovering the overpayment. PROBLEMS RECOVERING OVERPAYMENTS 7.1 Where the recovery of the overpayment cannot be resolved and/or genuine hardship can be demonstrated, a meeting will be arranged with HR, TSC Manager, Line Manager and the employee concerned, although not all may be required to attend. The employee should be given prior notice of the interview and informed that, should they wish, a friend or a trade union representative may accompany them to the interview. Evidence of hardship should be brought to this meeting if a case of genuine hardship is to be demonstrated. A record of this interview will be kept by the HR Officer and copied to the employee. 2

3 7.2 The purpose of the interview is to establish all additional relevant facts and any mitigating/personal issues that need to be taken into account. Normally, the outcome of this meeting will be an agreement to repay the overpayment in full, over an appropriate and agreed timeframe. However, in some extreme cases, this interview may lead to agreement to take the case to the Director or Assistant Director who may waiver the overpayment. 7.3 When making the decision, the Director/Assistant Director should consider these issues: whether the employee notified management of the overpayment and, if so, what actions were taken by management the employee s personal circumstances and the value of the overpayment the circumstances of the overpayment. 7.4 Where agreement cannot be found after all reasonable efforts have been made to reach an agreement with the employee concerned, Derby City Council will revert to the employee s contract to reclaim through one of the two options: recovery at a minimum of 12% of the individual s gross payment they receive each pay period, or recovery over the same period of time the overpayment occurred, whichever is the lesser, until the overpayment is fully recovered. 7.5 Derby City Council commits to dealing with overpayments in a reasonable and sensitive manner and with due regard for individual circumstances throughout the period of the overpayment. OVERPAYMENT PROCEDURE The circumstances 8. The circumstances in which employers can make deductions from their employees wages include: to recoup an overpayment of wages or expenses made as a consequence of disciplinary proceedings laid down by statute. required by statute to be paid over to a statutory authority to be paid to a third party in accordance with the employee s written agreement made in consequence of the employee taking part in a strike or other industrial action ordered to be made by a court or tribunal in settlement of money the employee owes to their employer. 3

4 Employers protection 9.1 Following a House of Lords decision in 1998, there is now a general right for employers to recover money paid under a mistake of fact or law. Before this decision, it was not possible to reclaim overpayments made under a mistake of law, for example a redundancy payment is given where technically there is no redundancy. 9.2 Fortunately for employers, section 13(4) of the Employment Rights Act 1996 recognises that, even with the most sophisticated payroll systems, it is possible to make mistakes in the computation of wages. Where it can be shown that such an error has been made, any difference between what should have been paid and what was paid will not be deemed to be a deduction. This provision will apply to employers making genuine mistakes and not those making a conscious decision to withhold money. 9.3 Legally, employers may now recover the money whether the overpayment is due to a mistake of law or a mistake of fact and this is the approach the Council intends to take. Identifying the overpayment 10.1 Once an overpayment has been identified, immediate action will be taken to prevent further overpayments The employee will be immediately contacted and will be provided with details of how the overpayment occurred and the gross amount overpaid. TSC/Payroll Section or HR will also inform the employee s Assistant Director, Head of Services and HR Officer about the overpayment and the gross amount involved The employee will be provided with a full breakdown of the overpayment, and a copy of the overpayments procedure. Copies will also be provided to those involved in the process If the employee has agreed to repay through their pay, TSC/Payroll Section will send them a letter of authorisation to sign, date and return If the employee wishes to repay by invoice rather than through their salary, this can be arranged as an exception If the employee s pay reduces, for example because of maternity leave or sickness absence, the employee may ask for the repayments to be reduced to the minimum of 12% of gross payment each period. If the employee is reduced to a no pay situation, recovery of the overpayment will cease until either the employee is back into pay, or the employee terminates their employment with Derby City Council. 4

5 Other factors to consider 11.1 If the employee s financial circumstances alter after they have agreed the repayment terms so they would have difficulty meeting them, they must notify TSC/Payroll Section. The officers who agreed the terms of the repayment will then consider if it is reasonable to alter them If the employee has received, or was eligible to have received, any state benefits during the overpayment period, the employee will need to contact the Department of Works and Pensions directly to inform them of the change in their circumstances. 5

6 Recovery of Overpayments Overpayment identified TSC/Payroll Section action to prevent further overpayments If TSC/Payroll Section or HR cannot reach employee, manager contacts employee with details TSC/Payroll Section or HR contact employee with details, keeping all parties informed Employee agrees to repay there are two options Full breakdown of information from TSC/ Payroll Section to employee and HR If employee is a leaver raise an invoice Employee agrees terms with TSC/Payroll Section and completes paperwork If requested, employee meets with TSC/Payroll Section, trade union representative and HR Agreement is reached and employee completes paperwork If an agreement cannot be reached, revert back to contract 12% or over period overpaid, whichever is the least Employee raises a grievance to be heard by Chief Officer Chief Officer makes decision and confirms in writing to employee 6

7 TO BE INCLUDED IN THE EMPLOYEE S CONTRACT OF EMPLOYMENT 1. All overpayments of salaries, wages and expenses will be recovered. 2. While you are still in our employment the recovery will be made directly from your salary/wage as a gross amount. You will have two options for recovery: recovery at a minimum rate of 12% of the gross payment you receive each pay period, or recovery over the same period of time that the overpayment occurred until full payment has been re-paid. 3. If you leave before the overpayment has been fully recovered the outstanding amount will be recovered from any monies due to you on your termination of employment. 4. An invoice will be raised for any outstanding debt. 5. If you have already left our employment at the time of the overpayment, or when the overpayment was identified, an invoice will be raised for the money owed. 6. More detailed information can be found in the which is in the Personnel Handbook. 7

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