Overpayments

Find out more about overpayments. We also cover what steps to take when one happens.

When overpayments happen

Overpayments can happen:

  • when an employer mistakenly believes an employee is entitled to the pay, or
  • because of a payroll error.

Employers can only take money out of an employee’s pay to fix up a mistake or overpayment in limited circumstances. For more information, visit Deducting pay.

Fixing an overpayment

When overpayments occur, the employer and employee should discuss and agree on a repayment arrangement.

If the employee agrees to repay the money, a written agreement should be made which sets out the:

  • reason for the overpayment
  • amount of money overpaid
  • way repayments will be made (for example, cash, cheque or electronic transfer) and how often (this has to be reasonable).

If a repayment arrangement can’t be agreed on, an employer should get legal advice. Find out where to get legal advice.

Example: How to pay back a mistaken overpayment

Tony was overpaid $2,000 over 3 years because of a payroll error. His award doesn’t allow an employer to make a deduction when an employee is overpaid.

Tony and his employer, Alice, meet to discuss the overpayment. Tony agrees to repay the money and they come up with a solution.

Tony tells Alice that he’d prefer to pay the money back in $20 instalments each week. This arrangement is put in writing and they both sign the agreement.

Tip

Employers and employees should talk to each other if an overpayment has been made. Then, come to an agreement about repayment and put this in writing.

Tools and resources

Related information

Have a workplace problem?

Problems can happen in any workplace. If you have a workplace problem, we have tools and information to help you resolve it.

Check out our Fixing a workplace problem section for practical information about:

  • working out if there is a problem
  • speaking with your employer or employee about fixing the problem
  • getting help from us if you can't fix the problem.

Help for small business