At Payroll Debt UK we use our experience in both debt collection and payroll administration to support employers to reclaim overpaid wages.

If an employee has been overpaid, the overpayment should be repaid even if the employer made a mistake. In other words, the employer is legally entitled to recover any salary overpayment from the employee. This rule will also apply regardless of whether or not the employee was aware of any error or has spent the overpayment.

Our priority is to recover the overpayment from the former employee as soon as possible. If needed and with the employer’s approval, we may establish a payment plan to recover the overpayment over several months.

We aim to avoid formal legal action if possible, but if the individual fails to repay the debt promptly, County Court proceedings may be necessary. In the event of a County Court Judgment (CCJ) being issued and ignored, we may have to resort to enforcement proceedings to ensure compliance with the court’s orders and recover the overpayment. However, we only take legal action after consulting with the employer.

Please note that additional costs will apply if County Court proceedings are necessary, and these will be added to the debt.

Employers have the legal right to recover any overpayment of wages, both during employment and after it has ended. However, if the employee no longer works for the employer, the employer cannot make a direct deduction from the employee’s pay to recover the overpayment. This makes it more difficult to recover the debt. In such cases, the employer may turn to Payroll Debt UK for assistance.

Once instructed, all communication with the debtor (the ex-employee) will be handled by Payroll Debt UK. Payments will be made directly to the employer, usually via bank transfer. We will keep the employer updated on the progress of the collection process and consult with them as necessary.

Even if an overpayment goes unnoticed for some time, an employer has the right to request repayment. According to the Limitation Act 1980, a legal claim based on a simple contract cannot be pursued more than six years after the cause of action occurred. In the case of an overpayment of wages, the cause of action arises from the contract of employment, and therefore, the six-year limitation period applies. This means that an employer cannot legally recover any overpaid wages that date back more than six years.