Management of Salary Related Overpayments

Version Number

2.0

Implementation Date

9/07/2012

Scope

Department-wide

Purpose

​Monies paid to a departmental employee, past or present, through the payroll systems and to which the employee is not entitled, are to be recovered in line with these processes.

Overview

​Although overpayments may occur through no fault of the employee concerned, the department is obligated to recover overpayments and manage revenue and expenses systems efficiently and effectively under the Financial Accountability Act 2009 (Qld) Part 5, Division 2, Sections 73 & 75.

Additionally, the Industrial Relations Act 1999 (Qld) Chapter 11, Part 2, Division 3 in conjunction with the Industrial Relations Regulation 2011 (Qld) Part ​​​6 provides circumstances and limits under which overpayments may be recovered.

Responsibilities

Payroll Services:

  • maintain overpayment reports and registers
  • negotiate appropriate repayment plans with employees where appropriate
  • identify trends and target business improvements to reduce overpayments
  • identify overpayments via payroll processing validation reports and provision of payroll services
  • undertake appropriate overpayment recovery processes depending on overpayment circumstances:
    • where an overpayment is from past engagements and the employee is no longer employed by the department:
      • refer to the Accounts Receivable Branch (ARB) team to be managed as an external overpayment.
    • if the overpayment arises as a result of an incorrect salary classification level assigned to an employee on their initial appointment:
      • correct the salary classification from date of appointment and advise the employee that the department will not attempt to recover monies paid
      • maintain the Loss Register and record overpayment details not recovered.
    • if the overpayment results from an employee’s absence/leave from work:
      • contact the employee only in special circumstances, e.g. the employee is on leave without pay. Employees in rehabilitation or graduated return to work situations will be contacted through their Regional Rehabilitation Officer
      • arrange for an automatic repayment to be deducted from the employee’s next pay with up to 25% of wages payable
      • amounts above 25% may be deducted with employee agreement
      • continue to automatically deduct repayments via payroll system until amount is repaid in full.
    • if overpayment results from circumstances other than leave:
      • contact the employee to negotiate an appropriate recovery plan (negotiate repayments of up to 25% of wages payable and amounts above 25% may be deducted with employee agreement)
      • if no agreement is reached, refer to the ARB team for recovery action in accordance with Debt Collection
      • complete and send a salary overpayment advice to the employee outlining overpayment details and agreed repayment plan
      • receipt employee’s confirmation of the agreement to repayment plan - to occur within 14 days
      • arrange for repayment to be deducted, as agreed, from the employee’s next pay
      • continue to  automatically deduct repayments via payroll system until amount is repaid in full
      • refer overpayment to the ARB team for recovery if employee does not respond to written advice of overpayment.

Employees:

  • accept joint responsibility for ensuring salary/wages payments are correct
  • notify Regional Office or Payroll Services of overpayment
  • negotiate to reach agreement on repayment of an overpayment
  • confirm agreement to the repayment plan with Payroll Services within 14 days.

Process

Management of salary-related overpayments – considerations taken into account for decision-making

The department may only recover overpayments from an employee’s pay if authorised by either the relevant industrial instrument i.e. Industrial Relations Act 1999 or the employee's written consent. However, the department may recover an amount paid to an employee to which they were not entitled because of absence from work, i.e. leave, regardless of whether or not the employee has consented.

Under the Industrial Relations Act 1999 and Industrial Relations Regulation 2000, recovery of the amount may occur by deducting amounts from the employee's wage for subsequent pay/s. Deductions through the employee's wages must commence within one year after payment and may continue for a period of six years after the overpayment occurred. These time constraints do not limit the department’s obligations/capacity to recover an overpayment as overpayments can also be recovered through the Finance Branch Accounts Receivable and Banking Team (ARB team). Deductions cannot be greater than 25% of the employee's pay for a pay period.

Circumstances with an associated risk of overpayment include changes to:

  • leave or absence
  • classification level and/or position
  • period of employment
  • allowances or deductions.

The Overpayments Review Committee considers employees’ submissions that debts be waived or reassessed and determines whether debt recovery action should continue or if the debt is cancelled in cases of financial hardship. The Financial Management Practice Manual - Debt Management provides further information about the Committee and debt cancellation criteria.

Debts which may require a more flexible approach to recovery (e.g. rehabilitation, graduated return to work cases) are not referred to the ARB team as external overpayments, with Payroll Services undertaking recovery in consultation with the appropriate Rehabilitation Coordinator.

Online Resources

Review Date

17/02/2013
Attribution CC BY
​Not applicable