Employer overpays employees, what now? How are challenges of erroneously overpaying employees addressed
The issue of erroneously overpaying employees is usually found in the public sector but more inquiries are rapidly coming from the private sector and employers don’t know how to deal with this situation. Legal
- BCEA section 34(1)
- BCEA section 34(5)
- The worker agrees in writing to the deduction of a debt, or
- The deduction is made in terms of a collective agreement, law (e.g. UIF contributions), court order or arbitration award.
- The employer has followed a fair procedure and given the worker a chance to show why the deduction should not be made,
- The total deduction is not more than 25% of the worker’s net pay.
- Repay any remuneration except for overpayments previously made by the employer resulting from an error in calculating the employee’s remuneration.
- Acknowledge receipt of an amount greater than the remuneration actually
- In Jonker v Wireless Payment Systems CC (2010) 31 ILJ 381 (LC)the employee had initially been paid a car allowance by the employer.
- However, when she was subsequently given a company vehicle, she was no longer entitled to the allowance.
- The employer erroneously continued to pay her the allowance for 11 months.
- When the employer notified the employee of termination of employment for operational reasons, she was informed that it would deduct the amount overpaid in two instalments – one at the end of May and the second at the end of June 2009, the last day of her notice period.
- The employer duly made the first deduction from her May remuneration.
- The employee approached the Labour Court seeking an urgent order for repayment of the amount allegedly unlawfully deducted from her May remuneration and an interdict restraining the employer from making the further deduction at the end of June.
- The employee contended that the employer was prohibited from making the deductions from her remuneration in terms of s 34(1) of the BCEA.
- The court said that as a general rule the BCEA prohibits deductions from employees’ salaries without their prior consent.
- However, deductions without consent were permitted where the employee had been overpaid in error. In such an instance the employer merely had to advise the employee of the error in payment and the amount of the deduction to be made.