SOAS University of London

Human Resources

Overpayment Policy and Procedure

Overpayment Policy and Procedure

  1. Policy
  2. Scope and Purpose of the Policy
  3. Background
  4. Responsibility on School employees to disclose a potential salary overpayment or any other significant overpayment
  5. Responsibility on School budget holders to review all salaries and any other payments charged to their cost code
  6. Overpayment of salary or any other payments for employees
  7. Automatic reversal repayment
  8. Extended repayments of salary overpayment or any other payments
  9. Employee change of circumstances which could affect their overpayment repayment schedule
  10. Overpayments of salary or any other overpayments paid to employees who have subsequently left the School’s employ
  11. Table of Responsibilities
  12. Associated Policies and Procedures
  13. Approval
1. Policy

The School (SOAS) is required to ensure that employees are paid correctly at all times. However, if an overpayment of salary or any other payment (either expenses and/or benefits) is made for any reason, the School reserves the right to take the necessary steps to recover the overpayment from the employee. Similarly the School will take steps to correct any underpayment of salary or any other payment to which an employee is entitled as soon as it is brought to the attention of the Payroll & Pensions Team.

2. Scope and Purpose of the Policy


This policy applies to all employees of the School. The purpose of the policy is to ensure that the action taken when dealing with an overpayment is consistent throughout the School.

3. Background

3.1 The definition of an overpayment is where an employee is paid an amount in excess of their contractual entitlement: Likely causes of an overpayment could include:

  • A termination form not being completed, received or processed on time
  • Late or no notification of sickness absence/ unpaid leave
  • An employee not returning from maternity leave
  • Overtaken annual leave entitlement when leaving the School
  • A processing error made by the Payroll & Pensions Team or Core HR
  • An error made by the Payroll & Pensions Team or Core HR under the instruction of the employing Department/Professional Services Directorate
  • A late change of variation to contract notification
  • Incorrect salary scale and point
  • Incorrect application of payment

3.2 Section 14 of the Employments Rights Act 1996 provides that it is not unlawful to make deduction from wages to recover an overpayment of salary providing that the employee was not given an expectation of entitlement of the payment.

3.3 Whilst it would not be the employee’s fault if they were to receive an overpayment from the School (unless they had not informed the School of a period of unpaid leave) the School’s position is that it would not be acceptable for an employee to simply assume that they had received a substantial increase in pay without there being some reason for the employee to believe that this is the case. Any substantial increase in salary other than through receiving an automatic pay increment within the employee’s pay grade would usually be supported by a confirmation letter sent to the employee from the Core HR Team.

3.4 Therefore, any School employee who suspects that he or she has received an overpayment should contact the Payroll & Pensions Team as soon as possible. The Payroll & Pensions Team will double-check the employee’s payment record and confirm whether or not an overpayment of salary or any other payment has been made.


3.5 Where an overpayment (or an underpayment) has been identified either by the School or by an individual employee, the Payroll and Pension Team will ensure that the employee's personal tax and NI contributions are recalculated within 28 days of the overpayment (or underpayment) being identified. This action is to ensure that there should be no detriment to an employee as a result of personal tax and NI adjustments following recovery of any overpayment (or an underpayment) made by the School.

Procedure

4. Responsibility on School employees to disclose a potential salary overpayment or any other significant overpayment


All School employees have a responsibility for checking their monthly payslip and to advise the Payroll & Pensions Team if they consider they have been overpaid when compared to their regular monthly salary payment and the additional payment / increase in salary etc has not been supported by a confirmation letter from the Core HR Team.

5. Responsibility on School budget holders to review all salaries and any other payments charged to their cost codes


All School budget holders are required to review on a monthly basis all salaries and any other payments that are charged to their cost codes. They have a responsibility to query any unusual items or unexplained variances with the Core HR Team, the Payroll & Pensions Team and/or the Finance & Planning Directorate.

6. Overpayment of salary or any other payments for employees


6.1 If an overpayment of salary or any other payment has been identified, the Payroll & Pensions Team will provide the employee with:

  • written notification of the overpayment
  • the reason for the overpayment
  • the amount of the overpayment
  • a repayment schedule
  • and the proposed overpayment reversal (see Appendix A)

6.2 The Payroll & Pensions Team will confirm the overpayment by letter sent to the employee’s home address as currently recorded on the HR Payroll database (example letter at Appendix A).

6.3 If the date of the notification is prior to the 14th of the month, the reversal will usually occur in the following month but see paragraph 6.4 and 6.6 below.

Example: if the reversal for an overpayment detailed in a letter dated 10th January 2011, the automatic reversal of overpayment will occur in the February pay run. 


6.4 If the employee considers that, due to exceptional circumstances, the timing of the reversal is not possible because it will cause financial hardship, or if they dispute the overpayment, they have the responsibility to contact the Payroll & Pensions Team before the 5th of the following month to request suspension of the reversal, until a mutual repayment plan can be agreed.

6.5 If the date of the written notification is between the 15th and the last day of the month, the reversal will automatically occur in the second month’s payroll after the written notification.

Example: if the reversal for an overpayment detailed in a letter dated 10th January 2011,  the automatic reversal of overpayment will occur in the March pay run. 

6.6 Again if the employee considers that, due to exceptional circumstances, the timing of the reversal will present them with financial hardship or if they dispute the overpayment, it is the employee’s responsibility to contact the Payroll & Pensions Team before the 5th day of the second month to request suspension of the reversal until a mutual repayment plan can be agreed.

Date of Letter from Payroll Date employee can suspend Automatic reversal Automated reversal of Overpayment
Before the 14th of the month The 5th of the month after the date of the date of the letter from Payroll The month after the date of the letter from Payroll
After the 15th of the month The 5th of the second month after the date of the date of the letter from Payroll The second month after the date of the letter from Payroll
7. Automatic reversal repayment


7.1 If the overpayment is less than 25% of the basic gross monthly pay, then the full gross amount will be recovered in one transaction. Any refund of Income Tax, National Insurance and pension contributions will also be adjusted.

7.2 If the overpayment is more than 25% of the basic gross monthly pay, the repayment schedule will be based as follows:

Overpyament Amount- % of gross monthly pay Period of recovery of overpayment
Below 25% 1 month
25%-50% 2 months
51%-75% 4 months
76%-100% 6 months
More than 100% Between 7 and 12 months
8. Extended repayments of salary overpayment or any other payments


8.1 If the employee considers that, due to exceptional circumstances, the timing or the rate of the reversal is not possible and will cause financial hardship or if they dispute the amount of the overpayment, it is their responsibility to contact the Payroll & Pension Team to request a Loan Form (see Appendix B) with which to propose a repayment plan.

8.2 This proposal will be considered on a case-by-case basis presented by the Payroll & Pensions Manager through the HR Director to the Finance & Planning Director who has overall responsibility for giving approval or otherwise. The Loan Form will be held on the employee’s Payroll file

8.3 There is no requirement for the form to be completed if the required repayments are accepted by the employee at the time the overpayment was discovered.

8.4 A copy of the notification letter will be held on the employee’s HR Payroll file.

9. Employee change of circumstances which could affect their overpayment repayment schedule


9.1 If, during the period of repayment of an overpayment, the employee’s contract terminates, the outstanding balance will be deducted from their final salary payment.

9.2 If, during the period of repayment of an overpayment, the employee’s salary is affected by any of the following: Statutory Payments only, Sickness Absence - Half Pay, Maternity Absence – Half Pay or Nil Salary then the overpayment may be re-negotiated subject to repeating the above process.

10. Overpayments of salary or any other overpayments paid to employees who have subsequently left the School’s employ


10.1 If an overpayment is identified after an employee leaves the School’s employ, the following procedure will be followed:

  • The Payroll & Pensions Manager will request that an invoice be raised by the Debtors’ Section of the Finance & Planning Directorate
  • The Payroll & Pension Team will provide the former employee with the invoice and written notification of the reason for the overpayment, the amount overpaid and the repayment demand
  • The address used will be the last known home address held on the employee’s HR Payroll record. Full re-payment will be requested to be paid within 14 days

10.2 This process will also be applied to outstanding obligations that arise from employees who take optional periods of unpaid leave.


10.3 The Finance & Planning Director has overall responsibility for the appropriate recovery action on the outstanding debts (see Section 3.3 of the School’s Credit Control and Debt Management Policy) and he/she will delegate specific actions to members of the Finance & Planning Directorate, as appropriate.


10.4 Former School employees may ask the School to consider a request for repayment by instalments which will require approval from the Finance & Planning Director.

11. Table of Responsibilities

Section Responsibilities
Human Resources Directorate
  • Responsible for the Overpayments Policy and Procedure
  • Responsible for ensuring that any School employee who is subject to a payroll discrepancy is dealt with in a fair and equitable manner and in accordance with current employment legislation and good practice
Payroll and Pensions Team
  • Has the responsibility for ensuring that when an overpayment has been identified, details of the overpayment is communicated to the employee, the Core HR Team, the Finance & Planning Director, and the Employing Department or Professional Services Directorate, in a timely manner
  • Payroll & Pensions Team will maintain records of any overpayments to School employees for audit purposes. These records will include:
  1. The amount owed
  2. The proposed method of repayment
  3. The proposed payment period
  4. The proposed final date of recovery
Payroll and Pensions Manager
  • Responsible for recording all salary overpayments in the School’s Ledger and for monitoring collection of these amounts
  • Responsible for providing monthly updates to the HR Director and the Finance & Planning Director
Finance and Planning Director
  • Has overall responsibility within the School for the recovery of debts
Employing Department & Budget holders
  • Have a duty to review all salaries and any other payments charged to their cost centre
All School employees
  • Have a responsibility to remain aware of their position and obligation under the Overpayments Policy and Procedure.
12. Associated Policies and Procedures


SOAS Credit Control and Debt Management Policy (May 2010).

13. Approval


13.1 This policy and procedure was consulted on with the School recognised trade unions, UCU and UNISON between October 2011 and April 2012.

13.2 This policy and procedure was approved by Executive Board on 23 April 2012.

HR Directorate

SOAS May 2012