You look at your bank balance on payday and see a whole lot more than you were expecting! First, you may rub your eyes, not sure whether to believe it. But what should you actually do if you’ve been overpaid?
Payday comes and payday goes very quickly.
I’ve always found it a bitter sweet day. It feels like I wait all month for it to arrive. The idea that I’ll be flush and have loadsa money!
In the few days leading up to payday things are tougher, the cupboards get bare and I love the thought of being able to buy some treat food and perhaps a bottle of wine to celebrate making it through another month.
However, when the day arrives it can actually be quite grim.
All the money that landed goes out just as quick as it came in. Rent, council tax, gas and electric, water…plus all the other bills that get lumped on.
Within seconds, payday wipes out all the hard work from the previous month. And then it starts all over again.
But what happens if you look at your bank balance on payday and see a whole lot more than you were expecting?
First, you may rub your eyes, not sure whether to believe it.
Have you done a load of over time? Has your employer finally seen sense and given you a much deserved pay rise?
I’m afraid it’s probably a no ☹
What to do if you’ve been overpaid?
Getting overpaid every now and then can happen due to admin errors. An extra tap on a keyboard and carry the wrong zero can mean you get paid too much.
While it may feel that you’ve won the lottery and you want to dash off and get a free holiday in the sun, or replace a worn out kitchen appliance, the money isn’t actually yours.
1. Check your payslips
The most practical thing you can do is check your payslips each and every time you get paid.
This way you’ll be able to see what’s normal and what’s not normal, rather than just assuming you can spend every penny in your bank account.
2. Report the overpayment
As soon as you think you’ve been overpaid, speak the department/person who actually pays you. They would much prefer you say something sooner, rather than later as it’s easier to fix.
They will probably suggest you either write a cheque to pay the money back, or they will do a deduction from your wages the following pay run to take the money back.
3. Move the money to a safe account
If you need to keep the overpayment for a while before you repay it, but you’re tempted you may spend it, transfer the money to a savings account.
It can easily feel like it’s burning a hole if it’s in your current account, so if it’s out of sight it’s out of mind.
What if you didn’t realise you’ve been overpaid?
It may be harder to track your wages if you are paid different amounts each time, so it’s worth keeping track of any time sheets you submitted and doing a cross check.
Perhaps you just don’t look at your payslips or bank account so you’re not sure how much money you have.
While there are people who check their bank accounts daily, there are others who only know they’re close to their overdraft limit because of a text notification from the bank.
If you’ve got extra money, you may think the text message is coming later in the month than normal, but may just shrug it off.
You will need to pay the money back, even if you spent it by accident.
When the work it out, your employer will write to you (or if they’ve got a bit more decency will ask you for a meeting) to let you know about the error.
If paying the money back will cause you financial hardship, then be very clear it’ll make you truly skint.
Most employers won’t expect for large amounts to be paid back all in one go – they get it’ll be hard for most. They’ll probably already come up with a suggested payment plan. It’s best to not agree for anything when you first meet with them if you’re not sure.
Take their suggestions home, sit down with your budget and work out what you can really afford. Then go back to your employer and let them know what would work for you. They may not be happy, but what other option is there?
If you’re struggling with them, contact ACAS who will be able to give you impartial (and free) employment advice.
What shouldn’t you do if you’ve been overpaid?
If you know there is extra money and you can see it’s an overpayment the worst thing you can do is spend it.
Even if you’re skint and could really do with the money, it will just put you in a bigger pickle later on down the line.
You will need to pay the money back eventually and your employer is able to make a deduction from your pay to recoup the mistake. This may mean getting into debt, or further debt, which is a horrible burden.
Even when/if you leave the job, you may still need to pay the money back. If it was a large sum of money they may get debt collections agencies to recover the money on their behalf.
Also, although you’ll be full of emotion when you find out, don’t get angry at your employer. While it was their mistake, human error does happen, they wouldn’t have done it on purpose. Getting angry won’t solve the issue and will probably just make you feel rubbish in the long run.
If it can happen to me…it can happen to anyone
A good number of years back, I started a new job and I was working on a split shift basis, one week early and the following week lates. Although it wasn’t the greatest of hours I got an enhanced rate of 20% on my wages.
So, the work was ok and when payday came, I was thrilled. I was young, naive and didn’t really know what my payslip was showing me. I didn’t even question it. Having been the first paycheck, it felt like a lot for the work I was doing, but I put it down to the top up on my wages.
I kept getting paid the same so just thought I had a really cushty job!
That was until I was called into the head of finance’s office 3 months later. I had been overpaid around £2,000 in total but by the time they spotted it and I’d spent the lot. (This was 15 years ago, so a LOT of money back then!)
They said I had to repay the money, which was annoying, but something I understood. Two other people had been overpaid too.
The worst thing was that I was used to the money I was getting. I had started budgeting and living with the higher pay, so when it was just cut, by around £600, it really stung my living expenses.
The overpayment was down to human error. The Payroll team set up my wages but accidentally put me on a 50% premium (which was the night shift), instead of the 20% split shift.
It took 6 months to pay the money back.
I was so disheartened, I left the job as soon as the money was paid back.
Getting overpaid BIG time
Sometimes overpayments are worse than others.
Getting paid for a job never done
A guy applied for a job at Nottingham Prison and was offered the role. He filled in all the paperwork, but never actually started the training.
However, according to the BBC, each month they paid him anyway!
Over the course of a year, he ended up being paid around £10,000 for a job he never started! Not his fault, and was probably due to a hiring manager or HR misplacing paperwork, or it not getting to payroll.
Getting into debt
The NHS, unfortunately, has a poor track record when it comes to making overpayments to its staff.
A tidy £60 million a year may have been paid out to their staff by accident, with some staff leaving and still being paid.
One NHS trust overpaid a doctor a cool £126,000 over three years (!!).
The trust has also had to refer nearly 250 staff to debt collection organisations in a year to help recover the overpayments.
Need debt help? Reach out for support (please)
So, instead of keeping the money to one side, staff who received the overpayments spent it. They may just not have known the money was not meant to be paid, if they are paid for different shifts or overtime, each payday may have been different and it’s hard to track (especially after tax).
Now, these are just a couple of examples, which may be more extreme, but it does happen and can cause severe financial hardship for employees as mentioned in this article from peoplehr.com.
Have you ever been overpaid? Did you fess up straight away, or keep the money in your savings account until you were asked for it back?
Did you get overpaid and didn’t realise? How did your employer react?
Join the conversation in the Skint Dad Community Group and share your opinion or overpayment story.
Ricky Willis is the original Skint Dad. A money-making enthusiast, father, and husband to Naomi. He is always looking for unique ways to earn a little extra.