By mistake, we have been overpaying a group of employees for the last two months.

By mistake, we have been overpaying a group of employees for the last two months. Can we put them back to the proper rate? Can we reclaim the overpayment from them?

The company can resume paying the correct contractual rate. Deductions to recover overpayments of wages or expenses are specifically excluded from the legislation covering unlawful deductions. It would nevertheless be advisable for a company that intends to recover an overpayment by deducting it from a worker's pay to agree a timetable for repayment with the worker and not to deduct more than a reasonable proportion of each pay packet. If it did not do so, the employer could face an allegation that it was acting in breach of its implied obligation not to act in a way that destroyed the trust and confidence between itself and the employee.

The worker may, in county court or High Court proceedings, argue that they have a defence to the employer's claim for repayment. This defence applies only if the worker had no reason to believe that he or she was not entitled to the original payment and the worker had changed his or her position on the basis of the payment by, for example, taking on additional financial commitments.

The EEF Employment Guide is intended to provide general guidance only. It does not purport to be comprehensive or to give legal advice. Users should always seek specific legal advice before taking or refraining from any action. Information and documents on this website are prepared in accordance with the laws of England, Wales and Scotland. Users accessing from Northern Ireland should be aware that different laws and interpretations may be applicable to Northern Ireland.