Overpayments
Find out more about overpayments. We also cover what steps to take when one happens.
On this page:
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
- Find my award
- Record-keeping and pay slips online course
- Find an enterprise agreement – Fair Work Commission
