Q: How do you legally deal with overpaid wages?

HRinfodesk---Canadian Payroll and Employment Law, November 2004

A: If an employer overpays an employee's wages, the overpayment may be deducted from future wage payments. This is viewed as a repayment of wages the employee was not entitled to receive.

Generally, the overpayment must be recovered in the same way as it was made. If the overpayment was made over a period of three pay periods, for example, then the employer is expected to recover it over three pay periods. If employment has ended, the overpayment can be recovered from the final payment.

However, an overpayment made over an extended period of time may not be considered to be an error that can be recovered.

If an employer gives an employee an advance on wages, the employer is permitted to later deduct that advance from later wages earned. The employer must clearly identify the payment as being an advance and this arrangement should be evidence in a written agreement with the employee. This practice often takes place with employees making commissioned earnings.

Published on HRinfodesk---Canadian Payroll and Employment Law

HRinfodesk is a service that is published by First Reference which includes legislative updates, a Library of Articles, FAQs, a Calendar of Events, Important Dates and an HR Internet Directory for expanded research. Our search tools will help you to quickly find results by jurisdiction, topic, date and keyword.

First Reference is a publisher of Canadian employment law reference manuals that are comprehensive, updated and practical.

Publications include The Human Resources Advisor, Human Resources PolicyPro and the HRinfodesk Bulletin and website.

For more information or to purchase one of our publications, go to www.firstreference.com