What should the employer do where a former employee agrees to repay an overpayment of wages discovered after he or she left the organisation but subsequently fails to repay the money?
If a former employee fails to repay an overpayment of wages as agreed, the employer should contact the ex-employee to find out why he or she has not complied with the agreement and ask him or her to make the agreed payment immediately. If the individual still fails to pay, the employer should consider whether to bring a claim in the civil courts for restitution to recover the outstanding amount, or to write it off, taking into account the amount of the overpayment.
To defend a claim for restitution the ex-employee would have to show that he or she has changed his or her position, as a result of the overpayment, in such a manner that it is inequitable for the employer to recover the overpayment.
An employer that is considering taking court action to recover an overpayment should take legal advice on the potential cost and chances of success of such a claim.