Your Questions Answered

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Q: An employer recently contacted us for some advice as they had inadvertently paid an employee double their salary and they wanted to deduct the over payment from their next salary. Was it ok to do so?

A: Upon inspecting their Contract of Employment, which they had constructed over time themselves, there was no clause within it to say any monies owed to the company or over payments will be deducted from the employee’s salary, which meant actually the employer did not have a clear right to deduct salary for any type of overpayment.

The employer was advised to approach the employee and obtain an agreement from them in writing to say the employer could deduct the following month’s salary or come to an arrangement to recover the overpayment over a couple of months.

To avoid such hassle in the future, the employer also had their Contracts amended to include a clause allowing them to deduct overpayments from employee salaries.

The only lawful deductions an employer can make from an employee’s salary are:
  • When the law requires them to make deductions like National Insurance Contributions, Income Tax, Attachment of Earnings orders;
  • Where the Contract of Employment specifically states deductions can be made;
  • Or where there is an agreement in writing between both parties before the deduction is made;
Check your Contracts of Employment to ensure there is such a provision within it.

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