For guidance on the treatment of the various pay elements that may be due when an employee leaves, for example, statutory redundancy pay or accrued holiday pay, please see our employee leaving section. There are exemptions from these conditions, which allow an employer to recover an overpayment of wages.
The law protects individuals from having 'unauthorised deductions' made from their wages, which includes complete non-payment of wages.
You can find out more about unauthorised deductions on the ACAS website. Your employee may be paying towards a workplace pension that you have set up or arranged access to under the auto-enrolment programme. Under arrangements where the pension amount is deducted BEFORE tax is calculated meaning the employee receives tax relief there and then — known as net pay arrangements. Under arrangements where the pension contribution is deducted after tax is calculated and HMRC later send the tax relief to the pension scheme — known as relief at source arrangements.
For more information about your auto enrolment obligations, go to our separate page dedicated to auto-enrolment. The deduction may be a specific amount or may be calculated based on a percentage of your employee's net pay. They may also ask you to provide information about your employee, which you must give if you are asked for it. You may be concerned that by making these type of deductions, you will place your employee in hardship.
However, if you receive an order, you must comply with it — under some orders, you may be fined or prosecuted if you do not. You can perhaps suggest that your employee talks to an experienced adviser at a Citizens Advice or other welfare organisation if they need help with money and debt. Students in higher and further education including part time study in the UK can get government-funded loans to help with their course fees and expenses while they are studying.
Loan rules can vary depending on the part of the UK where and when the loan was granted. There are three main plan types for student loan repayments, plan 1, plan 2 and plan 4. Students start repaying their students loans once they have left their course and their gross income so income before any deductions such as tax or NIC, for example is more than a certain amount — the threshold.
If their income is high enough, their repayments start in the April after they leave their course. Once an employee's income goes above the threshold, you deduct 9 per cent of their income that is above the threshold and pay it to HMRC who pass it to the SLC. This goes towards repaying their loan. Although repayments are calculated using gross income that is, income before deductions , you deduct them from their net income.
Since 6 April , there is also a new loan type that you may have to deal with — a postgraduate loan PGL. Please note that a borrower may be liable to repay a normal student loan AND a PLG concurrently, as they are separate loan products. This means that where applicable, employers will have to deduct both normal student loan and PGL deductions. Each loan type will be started and stopped in its own right, so if an employee has paid off both their student loan and PGL, the employer would receive two stop notices.
If they do not know, ask them to confirm with the SLC. The generic notification is a prompt for you to check and make the correct deductions for future pay periods. The prompt will be delivered to your inbox along with any other GNS messages. You should check your inbox regularly to ensure you can act on any prompts or sign up for email alerts. You can find the detailed employers student loan guidance on GOV.
If you have any questions, you should contact the Employer Helpline. Your employees can donate to charity directly from their pay using Payroll Giving. You can find information on setting up a scheme on GOV. In a time of hard to come by affordable credit and pay day loan sharks, some employers are helping employees to save by setting up a payroll deduction into a credit union savings account. The theory is that this presents a convenient and safe route into saving for employees credit unions are not-for-profit financial cooperatives and savings are covered by the Financial Services Compensation Scheme.
In addition, once the savings account is opened and the link between the employee and credit union established, the credit union may then be another avenue to explore in terms of a loan for the employee, if one is required.
If this is something that you are interested in looking into however, then the credit unions have lots of help and information for employers on setting up an account and making the payroll deduction. The first step is to contact a credit union. You should seek appropriate employment law advice, for example from ACAS , before making any deductions.
HMRC does not play a role in that aspect of the relationship between the employer and the employee. However, there may be consequences for tax and National Insurance NIC that flow from the recovery of overpaid wages, and these would follow the normal rules in place for employers. However, sometimes there will be a mismatch using this mechanism — for example, if the reduction in gross pay causes an employee to move below the relevant threshold for the deductions.
As an alternative therefore, or where an employee has left and the employer decides not to simply write the overpaid amount off , an employer should work out the amount of the overpayment that the employee actually received that is, the net amount, after deduction of tax and NIC and recover that either by making a deduction from net pay or by asking the employee to pay it back by cheque for example. Once that has been received, the employer should go back and rewrite the incorrect payroll entries to recover the overpaid tax and NIC from HMRC.
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What is a third party debt order TPDO? This Practice Note explains what a third party debt order TPDO previously known as garnishee orders is as a means of enforcing a judgment debt, with reference to CPR The order directs a third party who owes money to the judgment debtor to pay that. RobberyRobberyRobbery is a theft offence, involving dishonesty but elevated also by the intention to use force.
Robbery can only be tried in the Crown Court on indictment and is categorised as a class 3 offence. Skip to main content. Sign in Contact us. Legal Guidance. Employee competition and confidentiality. Managing the employment relationship.
Practice, procedure and settlement. Starting employment. Status, worker categories, sectors, regulatory. Trade unions and industrial action. TUPE, outsourcing, share and asset purchases. Sign-in Help. If an employee who is entitled to statutory sick pay SSP only is paid in full for a period of sick leave in one financial year, can the employer deduct the overpayment from salary paid in the following financial year?
Access this content for free with a trial of LexisPSL and benefit from: Instant clarification on points of law Smart search Workflow tools 36 practice areas. Back Step 1 of 2 Basic information. If this does not work, talk to Acas Advisory, Conciliation and Arbitration Service , Citizens Advice or your trade union representative.
You have the right to go to an Employment Tribunal to get your money. Check your contract to see if your employer is allowed to withhold your pay.
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