Over and Underpayments of Salary Procedure

Transcription

1 Over and Underpayments of Salary Procedure Over and Underpayments of Salary Procedure Page: Page 1 of 19

2 Recommended by Approved by Directorate of Organisational Development Executive Management Team Approval date May 2018 Version number 3.1 Review date May 2021 Responsible Director Responsible Manager (Sponsor) For use by Director of Organisational Development Deputy Director of Organisational Development All Trust employees This policy is available in alternative formats on request. Please contact the Human Resources Assistant on with your request. Over and Underpayments of Salary Procedure Page: Page 2 of 19

3 Change record form Version Date of change Date of release Changed by Reason for change x.1 August 2014 V Kirfoot Creation of procedure from guidance x.2 x.4 September 2014 December January th January 2015 L Ward L Ward L Ward Consultation with Payroll and HR team Policy Group consultation Policy Group consultation 2.0 January 2018 S Moss Review 3.0 March 2018 April 2018 L Ward Changes agreed through Policy Group 3.1 May 2018 May 2018 R Williams EMT Approval Over and Underpayments of Salary Procedure Page: Page 3 of 19

4 Over and Underpayments of Salary Procedure Contents Introduction Page 5 Purpose Page 5 Scope Page 5 Associated Documentation Page 5 Roles and Responsibilities Page 5 Overpayments Page 8 Underpayments Page 11 Tax, National Insurance and Pension implications Page 12 Monitoring Page 13 Appendix A: Legal and contractual issues Page 14 Appendix B: Hardship Form Page 15 Appendix C: Faster Payment Form Page 17 Appendix D: Equality Impact Assessment Form Page 18 Over and Underpayments of Salary Procedure Page: Page 4 of 19

5 1. Introduction 1.1 The Trust is funded by public money and as such has a responsibility to ensure robust mechanisms are in place to ensure all employees are paid accurately and on time. However, there will be occasions when an overpayment will occur, in such circumstances the Trust has a fiscal responsibility to recover the overpayment and to identify any action to minimize or prevent any future occurrence. 1.2 The Trust also has a responsibility to employees to ensure accurate payments and that there are appropriate processes in place to address significant underpayments of salary in a timely manner. 2 Purpose 2.1 This procedure acknowledges that incorrect payments of salary, expenses or other remuneration may occur, despite procedures and controls to minimise the risk. The purpose of this procedure is: To ensure that anyone who receives or authorises remuneration via the Electronic Staff Record database is aware of their responsibilities for incorrect payments. It sets out the process for handling overpayments and their prompt recovery, in accordance with the Employment Rights Act of 1996 Section 13 (See Appendix 1) and the guiding principles of how overpayments will be managed which seek to provide clarity, equity and control. This procedure sets out the process for dealing with underpayments and reimbursement to the employee in the next available pay run, as well as laying out guiding principles to provide clarity, equity and control. 3 Scope 3.1 The procedure applies to all employed and bank staff paid by North West Ambulance Service NHS Trust through the Electronic Staff Record database. The procedure also applies to the Trust s Payroll Provider. 4 Associated Documentation 4.1 You should read this procedure in conjunction with the management tools available on the HR Portal and the following related policies and procedures. Supplementary Payroll Procedure Anti-fraud, bribery and corruption policy and response plan 5 Roles and Responsibilities 5.1 Employees Employees are responsible for: Over and Underpayments of Salary Procedure Page: Page 5 of 19

6 5.1.1 Checking their payslip each month and immediately notifying their line manager of any under or overpayments. Where they have been overpaid they must take steps to ensure that the overpayment is not spent and is available to be repaid to the Trust. They are also responsible for repaying any identified overpayments in accordance with paragraph 6.2 of this procedure Recognising that it is their contractual responsibility to return any overpaid money to the Trust. This is the case even where the overpayment has occurred through no fault of the employee and where the overpayment could not easily be identified by the employee Ensuring that they understand their salary entitlement Where pay anomaly enquires do not receive an adequate response from payroll within agreed timescales the employee has a responsibility to escalate the matter to their line manager. The current payroll provider can be contacted by telephone on or by on payroll.nwas@elfs.myservicedesk.com Submitting accurate claims for overtime, meal breaks and travel or subsistence to their line manager, in accordance with the relevant policies and within payroll cut off dates Seeking clarification if they are unsure of the amount or type of any payments indicated on their payslip; Liaising promptly with their line manager or Human Resources to provide supporting evidence where there is a disagreement with the circumstances or calculations of an over or underpayment and also for suggesting a reasonable alternative if the advised repayment plan is not acceptable In cases of hardship the employee is responsible for the provision of accurate and honest information on the Hardship Form (Appendix B) to enable their personal circumstances to be taken into account when agreeing recovery arrangements. 5.2 Line Manager The Line Manager is responsible for: Ensuring that claims for payment and the flow of information regarding employee s contractual changes, absence and leaving dates from them to the Payroll and HR Teams is both accurate and timely Budget holders are responsible for ensuring that appropriate checks on payroll submissions are made prior to authorisation, with the aim of minimising incorrect claims Discussing pay issues with their employees accompanied by their trade union representative if requested, when pay errors arise Senior managers are responsible for investigating, identifying issues and recommending and implementing actions to prevent recurrence in circumstances where a line manager failed to submit claims for payment or to notify HR and/or Payroll of a change with implications to an individual s remuneration, in accordance with the Payroll Timetable - Over and Underpayments of Salary Procedure Page: Page 6 of 19

7 5.3 Human Resources Human Resources are responsible for: Assisting line managers in the recovery of all overpayments if needed Ensuring that the resolution of any disputed salary overpayments referred to NWAS by Payroll is managed Ensuring that all paperwork detailing termination of employment, changes in hours or salary etc., is processed promptly and accurately Ensuring that all line managers are trained in procedures relating to ESR records and paperwork Referring to the Payroll Timetable when processing changes and liaising with the Payroll Team for options, if urgent adjustments are required outside of the deadline times. 5.4 Payroll Payroll is responsible for: Running and checking a suite of pre-payment and exception reports (in line with audit recommendations) to establish as far as possible the correct values are being paid to the correct individuals prior to the payroll run Notifying the individual with full details of an overpayment and the proposed repayment plan in line with this procedure and providing more detailed breakdowns of overpayments, either in complex cases, or where requested Ensuring that overpayment deductions start and finish when notified or agreed Actioning requests for advances of pay or Supplementary Payroll processing for underpayments in a timely manner and in line with procedure Where an overpayment has been made to an employee of the Trust, the Payroll Team is responsible for sending a letter to the employee setting out the details of the overpayment and the reasons that it has occurred. The overpayment amount will be calculated to a net value and the individual can opt to repay the full overpayment direct to the Trust instead of a deduction from pay. The letter will explain the proposed recovery period and the timescales for contacting Payroll if there are difficulties in repayment. Deductions will then be made accordingly, unless the employee contacts Payroll to ask that this is not done and to arrange an alternative repayment plan. In cases where an overpayment covers multiple years it may not be possible to provide a net calculation and in these circumstances the overpayment will be provided as a gross amount Notifying the HR Hub of any overpayments that are in dispute or hardship cases, providing copies of the letters and relevant supporting documents and breakdowns sent out to employees in these cases. Over and Underpayments of Salary Procedure Page: Page 7 of 19

8 5.4.7 Responding promptly to individual enquires regarding under/over payment, investigating as necessary and keeping the individual fully informed of progress Where an overpayment has been made to a former employee who is no longer employed by the Trust the Payroll team will notify finance of the net overpayment. If necessary updated yearend figures will be supplied to the HMRC Producing monthly reports listing over and under payments identified, for review and follow-up action Every effort should be made to ensure the recovery process commences in the next available payroll process after the overpayment has been identified. 6 Overpayments 6.1 Overpayments Process Identification of overpayments All reasonable effort will be made to identify errors in payments as soon as possible to ensure that the risk of financial loss to the Trust is minimised If an employee identifies an overpayment they must contact Payroll and their line manager and notify them of the overpayment as soon as possible after it is identified When a line manager identifies a potential overpayment they must investigate the overpayment and immediately contact Payroll with sufficient details to enable the pay to be corrected and an accurate level of overpayment determined. They should also contact the employee to advise them that a potential overpayment has been identified and notified to Payroll If the matter is identified after the ETAD has been submitted but before Payday then the matter should be advised to Payroll as soon as possible to see whether action can be taken to prevent the overpayment taking place Calculation and Recovery - Payroll will review the information provided and calculate the overpayment. If the gross amount is below 50 they will arrange recovery to take place the following month for the full amount even where the overpayment has occurred over a longer time period. The employee will be notified If the payment is over 50 Payroll will confirm the overpayment and the proposed recovery plan, to the employee within a reasonable timeframe in line with this procedure Payroll will also aim to correct current pay (where necessary) as soon as possible, in order for the overpayment to cease and for the employee not to increase the amount owing The letter to individuals will ask them to contact Payroll in the following circumstances: They dispute the overpayment or the calculation They believe that they cannot meet the proposed repayment plan because it will cause them undue hardship Over and Underpayments of Salary Procedure Page: Page 8 of 19

9 If the employee contacts Payroll and it is a matter they can provide further information on e.g. calculation of the overpayment or reason for the overpayment, then they will advise the employee and seek to resolve the overpayment If the matter cannot be resolved by Payroll, the HR Hub will be notified of any disputes regarding either the overpayment or repayment plan. If the employee disputes the overpayment or the proposed repayment plan and the first deduction has been made, this deduction can be refunded where hardship has been caused. Any such refund must be approved by the HR Hub Manager or Deputy Director of OD Disputes - If the employee disputes the overpayment the HR Hub will contact the individual to obtain the details of the dispute If the dispute relates to whether the overpayment has occurred, the HR Hub will investigate with the line manager and Payroll. Once the investigation is completed they will respond to the individual s query and will contact the individual to discuss and agree an appropriate recovery plan If the employee indicates that they are unable to meet the proposed recovery plan as a result of hardship, the HR Hub will discuss alternative proposals with the individual with a view to reaching a mutually agreeable solution in line with this procedure. Individuals may seek advice from their Trade Union at this stage to help facilitate discussions If it is not possible to reach an agreement a hardship form (Appendix B) will be forwarded for to the employee for completion. The matter will then be referred to the line manager and relevant HR Advisor, who will arrange a meeting to discuss a repayment plan If a repayment plan is not agreed the Trust will consider all the available evidence and implement a reasonable repayment plan or will forward the net overpayment value to Finance so that an invoice can be sent to the individual. The individual can utilise the Individual Grievance Procedure if they remain unhappy regarding the proposed recovery plan Overpayments process for leavers - If an overpayment is identified for a leaver, Payroll will calculate a net overpayment figure and will forward it with supporting documentation to Finance. On receipt of a net overpayment figure Finance will raise an invoice and issue it to the ex-employee with a letter providing information on how to make payment to the Trust. If the individual fails to pay the invoice, the debt will be passed to an outside agency for collection. 6.2 Recovery Periods and Options The Employment Rights Act of 1996 entitles an employer to make deductions from wages where the purpose of that deduction is the recovery of an overpayment of wages or expenses. Although this right exists the Trust will aim through this procedure to reach agreement with employees regarding recovery plans and will only consider making unilateral deductions where attempts to reach agreement have been exhausted For current employees, recovery will normally commence from the next pay period in line with the circumstances described below:- Over and Underpayments of Salary Procedure Page: Page 9 of 19

10 For overpayments that have occurred in a single pay period and are notified to the employee within five working days of the pay date in which they occurred the full amount will be recovered in the next pay date. For overpayments of under 50, the full amount will be recovered from the next payroll. Where the overpayment has occurred over a number of pay periods, a repayment plan will be offered to recover the amount due over the same number of months. A repayment period in excess of this would only be considered when, after taking into consideration day-to-day living expenses, the repayment would cause undue hardship. The individual would be required to complete a Hardship Form (appendix B) Where an employee does not receive a regular monthly remuneration e.g. bank worker, then the repayment will be managed in line with the above principles but repayments will only be taken in the months that salary is paid. Such arrangements will be monitored to ensure that reasonable recovery of the overpayment is not being delayed Leavers - For those leaving the Trust before the repayment is completed any balance outstanding will normally become immediately payable and deductible from final payment, and an invoice raised if the final payment is not sufficient to cover the outstanding overpayment value In exceptional circumstances the Trust would consider repayment by means other than deduction from final salary e.g. pension lump sum, but this would have to be raised sufficiently in advance of termination to enable appropriate discussion and agreement to be reached Once an invoice has been issued to a leaver then the following circumstances will apply: A payment in full settlement of the invoice will be expected by return, unless evidence is provided which reduces or negates the originally calculated amount. A repayment plan can be considered as in above within a reasonable timescale. Where a repayment plan is not agreed then the Trust will seek recovery through a credit agency or through the courts 6.3 Hardship Where it has not been possible to achieve agreement of a suitable and acceptable repayment plan through discussion with the individual and they feel that they are unable to cope with the level of monthly reduction to their pay being proposed in the recovery plan, the employee will need to complete the Hardship Form. The purpose of this is to evidence the financial position of the employee in order to enable a realistic discussion regarding repayment arrangements Once completed this will form the basis of a discussion with the individual in order to agree an appropriate repayment plan. The Individual can be accompanied by their trade union representative should an individual meeting be necessary. Over and Underpayments of Salary Procedure Page: Page 10 of 19

11 Although no hard and fast rules on what constitutes a reasonable repayment period can be established because of differing overpayment and personal circumstances, under normal conditions, the minimum amount of repayment will not be below 50 gross per month in cases of severe financial hardship and the Trust will also consider how far the repayment period is likely to be extended before agreeing alternative repayment arrangements. Any proposed agreement below 50 per month must be agreed by the Head of HR and Head of Finance Where an individual s circumstances change during a recovery period they should raise any concerns with their line manager and where hardship can be evidenced through completion of the hardship form, then amendments to the recovery plan may be agreed. 6.4 Fraud If an overpayment of salary is caused because the employee has wilfully misrepresented facts or relevant data, all possible steps must be taken to effect immediate recovery. The matter may be reported to Local Counter Fraud Services, who will decide in conjunction with the Trust whether to carry out an investigation. This may culminate in criminal proceedings and/or disciplinary action commencing or taken against an employee in the event of a failure to disclose an overpayment. Full recovery will be sought and a repayment plan will NOT be an option in these circumstances. 7. Underpayments 7.1 All reasonable effort will be made to identify errors in payments as early as possible to ensure that the risk of financial loss to employees is minimised. 7.2 Reimbursement Procedure Underpayments may be caused by a variety of reasons, but most commonly they are identified by the individual. This procedure applies regardless of how the underpayment is identified General As soon as an underpayment is discovered, the individual should notify the relevant contact detailed in the table below, providing as much information as possible and copies of any supporting documents. Underpayment Attendance Information e.g. Overtime, e-expenses New Starter/Promotion Occupational Sick Pay Contact Line Manager HR Hub Esr.work@nwas.nhs.uk Payroll ELFS payroll.nwas@elfs.myservicedesk.com The relevant contact will investigate fully to identify where, when and how the error occurred Payroll will provide details of the circumstances of the underpayment. Over and Underpayments of Salary Procedure Page: Page 11 of 19

12 Once agreement has been received reimbursement will be made in the next available pay run, although an emergency payment may be possible in some cases Faster Payments (a one day payment direct to the employee s bank account) should be more than 100 net otherwise they will not be processed It is acknowledged that on occasion it would be unacceptable to expect an employee to wait for the Supplementary Payroll payment in their account. In these cases it would be expected that an urgent Faster Payment should be raised through the normal process. This requires the budget holder to make contact with the ELFS Helpdesk via . Payroll will confirm the required Fast Payments to Finance via spreadsheet. These cases should be the exception rather than the rule and will only be considered in the following circumstances: Where an employee has received no basic pay Where an employee has been significantly underpaid basic pay e.g. half pay rather than full pay Payments to be processed in the Supplementary Payroll Process need to be notified to Payroll by 12.00noon the next working day following pay day. Further information on the Supplementary Payroll Process can be found on the HR Portal If a current overpayment exists for an individual who has been identified as underpaid, the underpayment may be offset against the amount outstanding before any balance is paid to the individual. 7.3 Late Claims If claims were not submitted by the employee within the payroll timelines, payment will be made in the next available main payroll process. They will not be added onto the Supplementary Payroll Process or considered for a Faster Payment Payroll will keep a record of any Faster Payment requests to be able to monitor the volume and reasons for advances being paid and, where necessary take remedial action to reduce the number of requests received e.g. continual late receipt of timesheet information, incorrect entering of information onto the ETAD and late notification of changes to contract. 8 Tax, National Insurance and Pension Implications 8.1 Overpayments An overpayment that occurs and is repaid in the current financial year will have tax, national insurance and pension adjustments made at current rates and within the current financial year. Where the overpayment falls across previous financial years tax, national insurance and pension adjustments will be re-calculated as if pay had been made correctly at the time and any differences will be used to adjust the overpayment to a net value. Amended year end information will be provided to Her Majesty s Revenue and Customs (HMRC) and the Pension Agency by the Payroll Provider. Over and Underpayments of Salary Procedure Page: Page 12 of 19

13 Higher rate tax payers or those with more complex financial affairs may wish to obtain advice regarding any other impacts to their own personal financial circumstances and tax arrangements. Employees are responsible for seeking this advice independently of the Trust. 8.2 Underpayments Regardless of the financial year(s) during which the underpayment occurred, tax and national insurance are calculated and collected at the point of payment, in accordance with HMRC guidelines. Pension contributions need to be re-calculated as if pay had been made correctly at the time. The total difference in Pension deductions will be then offset against tax at the point of payment. Tax and national insurance contributions will be updated via normal means to the HMRC. Payroll will take responsibility for advising the NHS Pensions Agency of additional Pension contributions for previous years, while the current years adjustment will be updated via normal means. 9 Monitoring 9.1 The table below outlines the process for monitoring compliance with the procedure. Areas for Monitoring Number and nature of overpayments, advances and supplementary payments. Monitoring of overpayments and recovery Monitoring Process Information recorded by Payroll and reported to senior managers within HR and Payroll. Situation monitored through the Payroll Contract meetings. Reported at least annually to the Workforce and Communities Committee and Audit Committee. Over and Underpayments of Salary Procedure Page: Page 13 of 19

14 Appendix A: Legal and Contractual issues References and Legal Information Section 37 Contract of Employment If you identify a wage discrepancy it is your responsibility to report it to your line manager. You must repay any overpayments, regardless of the reason for its occurrence, in line with the NWAS Salary overpayment policy. If no agreement is reached management reserve the right to make reasonable unilateral recovery arrangements from salary. The following apply to this procedure: Employments Right Act 1996 Theft Act 1968 Standing Financial Instructions Employment Rights Act 1996 Extract The Employment Rights Act of 1996 (section 13) states the circumstances under which it is illegal for an employer to make deductions from an employee s wage, but it makes an exception in specific circumstances including the following circumstances; Where the purpose of the deduction is the reimbursement of the employer in respect of a) An overpayment of wages, or b) An overpayment in respect of expenses incurred by the worker in carrying out his employment, made (for any reason)by the employer to the worker. A deduction from a worker s wages made by his employer in pursuance of any arrangements which have been established a) In accordance with a relevant provision of his contract to the inclusion of which I the contract the worker has signified his agreement or consent in writing, or b) With the prior agreement or consent of the worker signified in writing. The defence of estoppel is not relevant to overpayments occurring in the employment relationship and would only be relevant if the Trust were issuing legal proceedings to recover this overpayment. Over and Underpayments of Salary Procedure Page: Page 14 of 19

15 Appendix B HARDSHIP FORM NAME ASSIGNMENT NUMBER INCOME YOU PARTNER Net Pay (take home pay) Any other Income Total Income OUTGOINGS Rent, mortgage or lodgings County Court orders and other fines Loan Repayments Credit Card Repayments Council Tax Food Utility Bills (gas, water, electricity, etc.,) Telephone Bill (including mobile) Vehicle Fuel Vehicle Tax and Insurance Vehicle Loan Television subscription (licence, satellite, etc.,) Others (specify) Vehicle maintenance Clothing Insurance Child Maintenance Over and Underpayments of Salary Procedure Page: Page 15 of 19

16 Nursery Fees Total Outgoings Income Total Income (You) Total Income (Partner) Total Income Total Outgoings Difference I confirm that the information I have given above is true and complete. I understand that if I give false information, disciplinary or other action may be taken against me. Full name: Signed: Assignment Number: Date: Over and Underpayments of Salary Procedure Page: Page 16 of 19

17 Appendix 4: Equality Impact Assessment Report Name of Policy, Service or Function Over and Under Payments of Salary Procedure Equality Impact Assessment carried out by Vanessa Kirfoot Date of Equality Impact Assessment 28 th August 2014 Step 1: Description and Aims of Policy, Service or Function Overall Aims To ensure that the Trust meets its statutory and contractual requirements with respect of Over and Under Payments of Salary. It also aims to provide a consistent and equitable approach to the management of Over and Under Payments. Key elements of Policy, Service, Process To provide information to employees regarding over and under payments of salary. To outline the responsibilities of management, Payroll, Finance, employees and HR in the administration and management of Under and Over payments of salary. Who does the policy, service or function affect? Employees of the Trust Managers Payroll Finance HR How do you intend to implement the policy or service change (if applicable?) To be approved by the Board of Directors Available on Trust Intranet/Internet Copy available on all sites Disseminated to all Managers Step 2: Data Gathering Summary of data available and considered Employment Rights Act 1996 Theft Act 1968 Outcomes of Data Analysis Over and Underpayments of Salary Procedure Page: Page 17 of 19

18 Equality Group Gender Race/Ethnicity Disability Sexual Orientation Religion or belief Age General (Human Rights) Evidence of Impact Available irrespective of Impact on persons who do not have English as their first language May impact on persons with visual impairment / learning difficulties / mobility problems No Impact No Impact No Impact No Impact Step 3: Consultation Summary of Consultation Methods Consulted with HR Senior Management Team Staff Side/Unions Executive Management Team Outcomes of Consultation Equality Group Gender Race/Ethnicity Disability Sexual Orientation Evidence of Impact No Impact May be required in alternative language formats May impact on the visually impaired and persons with learning difficulties or mobility problems No Impact Religion or belief Age General (Human Rights) No Impact No Impact No Impact Steps 4 & 5: Impact Grid Relevant Equality Area Areas of impact identified Gender No adverse impact Positive Race/Ethnicity May impact on persons who do not have English as their first language Negative Disability Impacts on visually impaired persons / persons with learning difficulties / Negative those with limited mobility Sexual Orientation No adverse impact Positive Religion or belief No adverse impact Age No adverse impact General (Human None Is the impact positive or negative? Key issues for action [Will form basis of action plan] meeting with managers will ensure full understanding of content of procedure Available in other formats where requested Over and Underpayments of Salary Procedure Page: Page 18 of 19

19 Rights) Step 6: Action Plan Name of Procedure: Under and Overpayments of Salary Procedure Issue identified and equalities Action to be taken By When Who By Expected outcome group or communities affected Language barrier Disability Disability Managers to check understanding and meet to explain procedure content if issues with reading language Managers to check understanding and meet to explain procedure content if issues with reading Managers to check understanding and meet to explain procedure content if issues with reading As requested Manager Employee has an understandi ng of procedure As requested As requested As requested As requested Local Manager Local Manager Large print version produced Alternative format provided / explanation given Large print version produced Alternative format provided / explanation given Progress None None None None Summary of Decisions and Recommendations Production in alternative formats / one to one explanation given for persons who require it on request Step 7: Monitoring Arrangements The implementation of the procedure will be monitored over the next 12 months, in the following respects: Enforcement of the procedure will be monitored Step 8: Date of Next Equality Impact Assessment At next review of procedure Name Over and Underpayments of Salary Procedure Page: Page 19 of 19