Overpayments can quickly become more than a payroll problem. We look at why prevention and early detection matter, and how organisations can manage recovery fairly when errors do occur.
Payroll teams put enormous effort into making sure people are paid accurately and on time. Even so, overpayments happen. The important questions are how quickly they are identified, what allowed them to happen in the first place, and how the organisation responds.
The sums involved can become substantial. In September 2025, an internal audit at Glasgow City Council found that five refuse workers had received monthly overtime overpayments, some continuing for up to four years. Around £40,000 was being recovered through repayment plans.
It is a useful example because overpayments do not necessarily result from one large mistake. An incorrect payment repeated month after month can quietly accumulate before somebody spots it.
The causes themselves are often obvious. A salary or contractual change may not be reflected correctly, overtime can be entered twice, or somebody may remain on the payroll after leaving. These are among the types of errors organisations encounter in everyday payroll administration. Complex organisations have plenty of opportunities for something to be missed, particularly when Payroll is processing changes across large and varied workforces.
The longer an error continues, the more work there is to untangle it. Payroll may have to revisit historic payments and establish precisely what somebody should have received. HR and line managers can become involved in conversations with the employee, while Finance needs an accurate view of the money still outstanding. Researching the original error, agreeing repayment arrangements and keeping track of balances all add work to teams that still have the next payroll to run.
Recovery needs to work for employees too
There is also the person receiving the letter or email.
Most employees reasonably assume that their employer has paid them the correct amount. Their rent or mortgage, bills and everyday spending are organised around the money they receive. Discovering several months later that some of it has to be repaid can create a difficult situation, even where the employer is perfectly entitled to recover the money.
The current Acas guidance on handling overpayments reflects this. Employers should contact workers as soon as they become aware of an overpayment and discuss how the money will be returned rather than simply making a deduction without telling them. Where an overpayment is large or has continued over a long period, Acas advises employers to be flexible and fair and to agree a repayment plan that helps the worker manage their finances.
A good overpayment process therefore starts well before recovery.
Find the problem before it grows
Payroll controls, validation and checks for unusual results create opportunities to find an error earlier. Recurring errors warrant earlier checks rather than simply a better response once a significant balance has accumulated.
No set of controls will remove the risk altogether. Payroll has too many moving parts for that. People join and leave, change hours and roles, work overtime and receive allowances, bonuses and other adjustments. The priority is to stop an isolated error becoming an established pattern.
When an overpayment does get through, the organisation also needs a consistent way of dealing with it. Employees should be able to understand what has happened and how the amount has been calculated. Payroll and Finance need to know what has been recovered and what remains outstanding. Managers need enough information to handle conversations properly. Overpayments create additional work across Payroll, HR and management, while recovery requires ongoing administration, balance tracking and reporting.
Avoiding the error in the first place will always be preferable. Finding it early is the next best outcome. Where neither happens, a clear and fair recovery process can prevent an already difficult payroll problem from causing unnecessary disruption or undermining employee trust.
Take the work out of overpayment recovery
Zellis Overpayments Recovery is a Zellis service that helps stop overpayments at source and, when they do happen, takes the recovery administration off your team. You recover what you’re owed, while protecting employee trust.
