Payroll Overpayment Implications

T

TheLastBeep

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Hi All,

I have a situation where I have been overpaid a significant sum and want to make sure I've considered all the implications before agreeing with the company on how it will be resolved.

HR alerted me that my bonus has been paid twice, they have admitted responsibility and that this was caused by human error. Their proposal for resolution is that they will reduce my wages for the next 2 months to cover the overpayment.

The sum involved is quite large so this would result in me essentially have no basic pay for the next 2 months.

I'll be requesting for the repayment to occur over a longer period but I'm sure that there are other tax implications here and questions I need the HR team to answer before I agree to the repayment plan. Would anyone be able to give me some guidance on the questions I should be asking?

All help appreciated.
 
Taxwise, any repayments you make this year will be net of the tax deducted from the overpaid bonus and any repayments next year would have to be gross and you reclaim the overpaid tax from Revenue when it's all paid back. So there would be extra hassle involved in spreading the repayments into next year.
 
They will need to make a reducing balance taxable deduction from your pay over a period and the taxes etc this year will be self-adjusting. It will reduce your pre-tax pay, thereby reducing the tax you paid on the erroneus payment and paying off the gross "debt". Their error, your preferred solution.

There will be no extra hassle or other implications continuing this deduction into the next tax year (or the one after that).
 
Can you not just return the overpayment in full by bank transfer? This was a bonus paid by the company you work for where one of your colleagues (unless payroll is outsourced) made an error. Return the money and forget about it.
 
Coming up to Christmas that’s not ideal. Decide on the repayment schedule and it should be yours to determine. If it suits you better early next year then say this.

Did you blow the bonus on something? If you spent it on something that you would not have bought except that you got the bonus then it is very galling. You owe it back but try to be strategic about how it works for you.
 
This happened to my husband but it was a payment of the monthly salary twice, he returned the money immediately we spotted it.

This is what the OP ought to do but as it seems the money is spent, and it would be a hardship to pay it back as HR wishes, then HR should be more flexible.

I find it very odd that the bonus is so high it's equivelent to 2 months wages and that the OP did not realise there was a mistake with the payment. Surely OP was expecting much less and why did OP not double check. On a thing called a salary slip. Also as the OP could clearly not be expecting the amount how come it is spent.
 
Hi @Bronte, the money is not spent, so if the best approach is the return the money directly by bank transfer this is something that can be done. This isn't what has been suggested by HR, although maybe they have assumed it has been spent.

As for not identifying the mistake sooner, I have to hold my hands up on that one. I was away on a business trip when payment was processed this month and hadn't checked my salary slip (we have to access them through and intranet system).
 
TheLastBeep said:
Hi @Bronte, the money is not spent, so if the best approach is the return the money directly by bank transfer this is something that can be done.
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LOL then there is no problem. Ask HR if this is acceptable which I can't see why it wouldn't be. Without any need to mess around with your salary. It's a straightfoward transfer to you in error and you transfer it back making everthing correct. No tax issues, no payroll issues.
 
I disagree. The deduction will have to be processed through the payroll system to ensure the taxes and other deductions are correct and to avoid messy manual adjustments post facto.
 
mathepac said:
I disagree. The deduction will have to be processed through the payroll system to ensure the taxes and other deductions are correct and to avoid messy manual adjustments post facto.
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Well then let payroll look after that. Just pay back the overpayment in full now and tell payroll to rerun the period with the correct amount.
 
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