Overpayment recovery process

Purpose

We are responsible for recovering overpayments as they involve public funds.

Where we are legally entitled to recover an overpayment, we do this as per our debt recovery process and guidance.

We make every effort to recover overpayments in full, as soon as possible.  

Overpayments can include: 

  • basic pay 
  • sick pay 
  • maternity or adoption pay 
  • any sums arising from funding agreements for training or relocation  

This list is not exhaustive.

Roles and responsibilities

There are several stakeholders involved in overpayment recovery: 

  • an employee or ex-employee who has been overpaid  
  • a manager or head teacher of an employee who has been overpaid 
  • senior managers  
  • our head of finance 
  • human resources (HR), including:
    • the payroll manager 
    • the exchequer services manager 
    • credit control 

Managers can delegate actions to another suitable person.  

Employee or ex-employee 

Employees should: 

  • tell their manager or head teacher straight away if they have been overpaid 
  • show honesty and integrity as per the code of conduct 
  • make every effort to repay the full amount immediately 

If this will cause financial hardship, then we may agree to payment by instalments. It is important to keep track of personal circumstances in case a change allows the employee to repay the debt sooner.  

Manager or head teacher 

Payroll will notify the manager or head teacher of an overpayment at the same time as the employee or former employee. They should cooperate in recovering the money regardless of how the overpayment happened.   When an issue is identified the manager should monitor their budget to ensure there are no more overpayments. 

When managers or head teachers receive formal notice of an employee leaving, they should: 

  • complete a leaver's form 
  • submit the form no later than the 2nd of the month that the employee will leave 

This will stop any overpayments to employees who are leaving.

Recovery or repayment by instalments

Employees still employed by us 

Whatever the value of the overpayment, we will pursue it through payroll. 

If it is less than £50 (gross) we will deduct it from the next available pay period. 

We will not pursue overpayments of less than £50 (gross) if identified after one year has elapsed. 

Payment by instalments 

We aim to recover the overpayment immediately. However, if this would cause financial hardship: 

  • the line manager or budget holder may agree the employee can pay by instalments. This should be for no longer than three months. 
  • if repayment in no more than three months would still cause financial hardship our head of finance and relevant senior manager (head of service or above, or head teacher) may approve a period of more than three months to pay. This will depend on the circumstances in which the overpayment arose    

If the overpayment is for £500 or more, which the employee should have noticed, we will recover the amount from the next available pay period. 

The payroll manager may agree to repayment over a longer period: 

  • if the overpayment is for £500 or more and the employee would not have easily been able to identify the error 
  • where the overpayment is more than a month's salary

The payroll manager should consult with: 

  • the relevant senior manager or head teacher, in liaison with the governing body 
  • head of finance 
  • HR services manager or Strategic HR Business Partner 

The payroll manager should record the reasons for this and report this to the head of HR. 

If employment ceases before the overpayment is repaid in full we will deduct any monies owed from: 

  • the employee's final salary 
  • any monies due to be paid to the employee, for whatever reason, arising from his or her employment  

If the employee's final salary is insufficient to repay the remaining balance, they must repay the outstanding amount in line with the normal debt recovery process. 

We will record on file the reason for repayment by instalments. We will review this if circumstances change, for example: 

  • the employee leaves 
  • the employee increases their weekly hours 

Escalation process 

We will apply an escalation process if the employee: 

  • does not respond within four weeks of notification of the overpayment 
  • does not agree to arrangements for the full recovery of the overpayment 

Stage 1

The payroll manager will notify the following stakeholders that the employee has not responded or agreed a repayment plan: 

  • senior manager or head teacher
  • our head of finance 
  • HR services manager or Strategic HR Business Partner 

The senior manager or head teacher will liaise with the line manager. The line manager will assist fully in recovering the money regardless of how the overpayment occurred. They should liaise with the employee as appropriate.  

Stage 2

The payroll manager will begin debt recovery proceedings by raising an invoice for the full net amount: 

  • two weeks after the above action, we have not reached a recovery agreement 
  • there are no known exceptional circumstances to consider 

The payroll manager will inform: 

  • the employee 
  • relevant senior manager or head teacher 
  • our head of finance  
  • HR services manager or Strategic HR Business Partner

The credit control team will agree a repayment plan with the employee.

Former employees

We will pursue net overpayments owed by former employees through the normal debt recovery process.  

Payment by instalments 

We aim to recover the overpayment immediately. If immediate repayment would cause financial hardship, we may agree to payment by instalments. This would depend on the circumstances in which the debt arose in the first place.  

If there are special circumstances, we may extend the time limits for the amount to be repaid. We will agree this with the credit control team, and in consultation with: 

  • the relevant senior manager or head teacher 
  • our head of finance 
  • HR services manager or Strategic HR Business Partner 

We will store all paperwork until the overpayment is cleared.  

Escalation process 

A former employee must respond or agree to arrangements for the full recovery of the overpayment within 56 days of notification. If they do not, the credit control team will notify and confirm the current position with: 

  • the budget holder or head teacher 
  • our relevant head of finance 
  • HR services manager or Strategic HR Business Partner 

The budget holder, in conjunction with those identified, is asked if we should: 

  • write off the payment, or 
  • start legal proceedings 

Employees due to start maternity or adoption leave

Where we identify an employee as being overpaid or having a repayment plan in place when they are due to start maternity or adoption leave, the line manager or head teacher will discuss the following options with them before they commence the leave:

  • to repay the identified overpayment or remaining balance in full prior to commencing maternity leave
  • continue as is with repayment plan until the employee's pay drops to Statutory Maternity Pay (SMP) or Statutory Adoption Pay (SAP).  At this point if there remains an outstanding balance this will be put on hold until their return from maternity or adoption leave.  Upon their return the payroll manager and line manager or head teacher will undertake a review to determine if circumstances have changed, which would enable the outstanding balance to be repaid in less time
  • to put any repayments on hold until return from maternity or adoption leave having regard to their duty to safeguard taxpayers' money

The line manager or head teacher will confirm the employee's decision to the payroll team in order for them to take the appropriate action.

Should the employee choose not to return to work at the end of their maternity leave, we will recover any outstanding monies in line with this process.