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Your questions answered: Can we deduct overpayments from wages?

By Portner Press on March 25th, 2019
  1. Industrial Instruments
  2. Modern Awards

 

Q
We have recently found out that we have been paying one of our employees for their half-hour lunch break and this has been getting paid as overtime every week for the last 18 months.

Can you please advise if we are able to ask for this money back and would we be able to deduct from their wages each week going forward?

This person would have known they were getting paid for overtime even when they hadn’t worked any overtime periods.

 

A
You are unable to deduct amounts from an employee’s entitlements unless the employee has given their written consent and the deduction is principally for the employee’s benefit.

You should check any relevant award that covers the employee to see if it prohibits deductions.

You could request that the employee pay the overpayments back to you, but you would have difficulty enforcing this if they declined.

You could seek to enter an agreement with the employee that outlines:

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

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