I’ve been overpaid! What should I do?

If you have been accidentally overpaid by your employer, it may seems like a lucky bonus, but don’t assume you can keep the money!  Here we look at overpayments for Employees and Freelancers/Sole-Traders.

For employees

Where an employer has made an accidental overpayment of wages or expenses (including holiday pay), the legal position is that the employer can recover this overpayment from an employee by deducting the amount from future wages or salary. The situations where an Employer can make deductions from your wages are limited but this is one situation that is allowed by legislation (see our full article about authorised and unauthorised deductions from wages).

For freelancers

Although overpayments for freelancers / sole traders may be unlikely (you’re more likely to have to deal with late payments!), if you are overpaid by a client then common sense says you should repay any overpayment to ensure you keep a good relationship with the client to secure future work. It is always advisable that your work with the client is covered by a form of contract that should specify when and how much you’ll get paid and which can be referred to by both parties.

Overpayments for freelancers are made more complicated however due to tax / VAT / accountancy implications, and it is something you may want to take advice from your Accountant about.

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