Policy and Procedure in case of an under or overpayment of salary, allowances and benefits. V4.0

Policy and Procedure in case of an under or overpayment of salary, allowances and benefits. V4.0

Summary. The Trust has a duty to ensure that all staff are paid correctly. Occasionally, there will be incorrect payments made that could result in either an under or overpayment of monies to a staff member. This document helps to identify the processes involved to ensure that the correct payment is made. This could be by pursuing recovery from a staff member for identified overpayments or by correcting an identified underpayment to a staff member. 2 of 13

Table of Contents Summary.... 2 1. Introduction... 4 2. Purpose of this Policy/Procedure... 4 3. Scope... 5 4. Definitions/Glossary... 5 5. Ownership and Responsibilities... 6 6. Standards and Practice... 8 7. Dissemination and Implementation... 8 8. Monitoring compliance and effectiveness... 8 9. Updating and Review... 9 10. Equality and Diversity... 9 Appendix 1. Governance Information... 10 Appendix 2. Initial Equality Impact Assessment Form... 12 3 of 13

1. Introduction 1.1. Royal Cornwall Hospitals NHS Trust has a duty to ensure that all employees are paid the correct salary, allowances and benefits. 1.2. This document identifies the process to be followed when a member of staff receives an incorrect salary, allowance or benefit (expense) payment. This applies to both under and over payments. 1.3. As public monies are involved, the Trust has a responsibility to ensure that all overpayments are recovered. 1.4. When salary overpayments occur it is the policy of the Trust to vigorously pursue payment. In accordance with the Employment Rights Act 1996 via the Trust s appointment documentation and contract of employment, the Trust retains the right to recover through payroll any payments made in error. Where recoveries are made due notice must be given to the employee. 1.5. This policy is intended to promote equity and fairness in ensuring that the error is corrected and any under or overpayments are recovered or repaid appropriately. 1.6. This version supersedes any previous versions of this document. 2. Purpose of this Policy/Procedure 2.1 The purpose of this document is to ensure that over and underpayments are identified and either recovered or paid on a timely basis. 2.2 All employees are responsible for regularly checking that they are receiving the correct payment and benefits, and must bring any anomalies to the attention of their manager and the payroll department as a matter of urgency, as soon as they notice the anomaly. 2.3 The Trust acknowledges that overpayments do occur due to a number of reasons such as: a termination form (R form) not being completed, received and actioned on time; a contract amendment form not being completed, received and actioned on time; inaccurate information being supplied by a manager; and an error being made by the Payroll team. 4 of 13

3. Scope 3.1 This policy applies to all employees on a permanent or fixed term contract with the Royal Cornwall Hospitals NHS Trust and Kernowflex workers. 4. Definitions/Glossary 4.1 There are a number of ways in which an employee can be incorrectly paid, but not restricted to: an overpayment of salary an underpayment of salary payment of incorrect travel or non-travel expenses duplication of a payment deduction made in error 4.2 Overpayment: Where an employee, or an ex-employee is paid an amount in excess of their contractual entitlement. The likely causes of an overpayment include, but are not restricted to: a termination notification ( R Form) not being completed, received or actioned on time late or lack of notification of sickness absence staff not returning from maternity leave an error being made a late change notification incorrect salary banding. 4.2.1 Payment errors can be identified in several ways: a member of the payroll team identifies that an error has occurred the employee upon receipt of salary identifies that an error has occurred the budget manager identifies that an error has occurred 4.2.2 When an error in payment has been identified, the individual or payroll team should take action as quickly as possible to rectify the error and the Electronic Staff Record (ESR) should be updated accordingly. 4.2.3 For the purpose of recovery, overpayments have been categorised into three areas: i. Salary/Wages Adjustment: An adjustment in pay that recovers monies overpaid in the current and previous month only. These monies will be recovered automatically from salary and will not be treated as an overpayment. See 4.2.4 below. ii. Overpayment of Pay and Allowances: An adjustment in pay that requires monies to be recovered from an individual and relates to periods prior to the current and previous month. Employees will be advised in writing by the Payroll Department of the details of the overpayment as 5 of 13

soon as they become aware of it. An individual must also promptly inform their manager and the Payroll Department as soon as they realise that they are being overpaid. See 4.2.4 iii. Debt: An unrecovered overpayment to an ex-employee. An invoice will be raised and sent to the ex-employee together with appropriate information identifying the basis of the overpayment. 4.2.4 All cases of overpayment will be dealt with on an individual basis to ensure the minimum hardship for employees. It is expected that overpayments will be recovered in accordance to the length of time they occurred. For example, an overpayment made over three months would be recovered over three months. Recovery outside of these guidelines could be considered in extenuating circumstances and would be at the discretion of the Financial Controller. A formal invoice will then be raised by the Finance Department. 4.2.5 If the employee is still employed by the Trust, The Trust s preference will always be to activate recovery by mutual agreement with the employee either via the raising of an invoice or a payroll deduction. Where this has not been possible the Trust will invoke its right to recover overpaid salary by payroll deduction following written notice by either the Payroll or Finance Departments. 4.2.6 If the employee is no longer employed by the Trust it is expected that payments are received in line with an agreed payment plan by cheque or automated bank transfer. 4.3 Underpayment of Pay and Allowances: When an underpayment is identified it will generally be corrected in the following month s payment. The likely causes of an underpayment include, but are not restricted to: a variation to contract notification being submitted or actioned after payroll cut off; a late change notification; incorrect salary banding; Late submission of expense claims, excess hours, enhancements, overtime etc. 5. Ownership and Responsibilities 5.1 Responsibilities of Payroll Department It is the responsibility of the Payroll Team to: ensure that information is input into ESR in an accurate and timely manner within agreed roles and responsibilities; ensure that robust checking processes are in place to identify and reduce over and under payments; ensure any payment errors are resolved following agreed payroll procedures; 6 of 13

ensure any payment errors are identified and the employee advised in a timely manner; follow this procedure in resolving payment errors. 5.2 Responsibilities of the Line Manager 5.2.1 It is the responsibility of Line Managers to ensure that: changes in employee contracts, including terminations are actioned in a timely manner. In the event of a late leaver the manager must supply a forwarding address for the employee; employees are notified in writing of the changes to their contractual terms; where an employee has had an unauthorised or inaccurate payroll deduction and not received a timely response to the enquiry from payroll then the matter is raised via the employee s line manager with the Human Resources Department. 5.3 Responsibilities of the Individual 5.3.1 All employees are responsible for regularly checking that they are receiving the correct payment and benefits and must bring any anomalies to the attention of their manager and the payroll department as a matter of urgency, as soon as they notice the anomaly (please refer to section 5.4). It is the responsibility of the individual employee to: ensure that they understand their salary entitlement; check their payslip every pay period to ensure that it appears accurate; raise pay anomalies with the Payroll Department promptly; be aware that they may need to make repayment to the Trust in a short time frame; ensure pay anomaly enquiries that do not receive an adequate response from payroll within an agreed timescale, having been previously communicated are escalated through their line manager. 5.4 Responsibilities of the Counter Fraud Service 5.4.1 All NHS Trusts are duty bound to recover overpayments in full. Where any overpayment occurs, the Local Counter Fraud Specialist may be asked by a line manager and/or any member of the Finance or Human Resources Departments to investigate the case as suspected fraud or theft. 5.4.2 The Trust recognises that a staff member in receipt of an overpayment may not be responsible for causing that overpayment. However, once they are aware that they are not entitled to some or all of the money they have received they may commit criminal offences if they do something that suggest they intend to keep that money, e.g. contrary to the Theft Act 1968 Section 24A which makes it an offence to dishonestly retain a wrongful credit or the Fraud Act 2006, Section 3 which makes it an offence to fail to disclose information. 7 of 13

6. Standards and Practice 6.1 Notification of over/under payments for Individuals 6.1.1 Payroll queries must be raised with the Payroll Department. Initially ring 01872 258413 to raise the matter and you will then be referred to the correct pay clerk to deal with the issue. 6.2 Process for resolving payment errors 6.2.1 Once payroll are aware of the exact nature of the error, they will calculate the amount of the payment error. Once the error has been verified as correct, then for an underpayment, correction will be made in the following month, and for an overpayment, the process will begin with a letter being sent to the employee detailing the amount. 6.2.2 Where a payment error has been made, payroll will explain how the payment error has occurred. The normal process is to pay the underpayment or reclaim the overpayment in full at the next pay interval. Payroll will liaise with the Finance Department to enable recovery, where applicable. 6.2.3 See Sections 4.2 and 4.3 above for more information on how over and under payments are handled. 6.2.4 In the event that a repayment plan cannot be agreed or the debtor reneges on a repayment plan, then recovery may be pursued through a debt collection agency and the Courts. 7. Dissemination and Implementation 7.1 This document will be made available on the Trust s documents library and replaces earlier versions. 7.2 This document will be shared with Divisional General Managers / Departmental Heads and HR Business Partners so that they are aware of the process for when an overpayment situation arises. 7.3 This document will also be shared with chairs of the JCNC and JLNC. 7.4 There are no particular training needs identified within this policy. 8. Monitoring compliance and effectiveness Element to be monitored Lead Tool Frequency Monthly analysis of salary overpayments and underpayments Financial Controller Not applicable The process for over/underpayments will be periodically monitored and reported initially to the Senior Finance Team. Periodic internal and external audit review of processes will occur. 8 of 13

Reporting arrangements Acting on recommendations and Lead(s) Change in practice and lessons to be shared Finance Committee The Financial Controller will lead on any outcomes of monitoring and liaise with Human Resources/ Payroll. Required changes to practice will be identified and actioned within one month of identification. 9. Updating and Review 9.1 This Policy & Procedure will normally be reviewed every 3 years. 9.2 A revision of the document may be necessary if there is an identified issue with the handling of under/overpayments of salaries, allowances or benefits that is so significant that a revised approach is required. 10. Equality and Diversity 10.1 This document complies with the Royal Cornwall Hospitals NHS Trust service Equality and Diversity statement. 10.2 The Equality Impact Assessment Screening Form is shown at Appendix 2. 9 of 13

Appendix 1. Governance Information Document Title Date Issued/Approved: 01 Date Valid From: 6 Date Valid To: 5 July 2018 Policy and Procedure in case of an under or overpayment of salary, allowances and benefits. Directorate / Department responsible (author/owner): Finance - Sarah Gould Contact details: 01872 258049 Brief summary of contents Suggested Keywords: Target Audience Executive Director responsible for Policy: Provides clear guidance to staff on the Trust s policy in relation to an employee or ex-employee receiving an under or overpayment of salary, allowances and benefits. Salary, over-payment, under-payment, allowances, benefits RCHT PCH CFT KCCG Director of Finance Date revised: May 2010, June 2012, This document replaces (exact title of previous version): Approval route (names of committees)/consultation: Policy and Procedure in case of an Under or Overpayment of Salary Allowances Originally approved at November 2008 Audit Committee Divisional Manager confirming approval processes Name and Post Title of additional signatories Name and Signature of Divisional/Directorate Governance Lead confirming approval by specialty and divisional management meetings Signature of Executive Director giving approval Publication Location (refer to Policy on Policies Approvals and Ratification): Document Library Folder/Sub Folder Director of Finance Not Required {Original Copy Signed} Name: Karl Simkins {Original Copy Signed} Internet & Intranet Intranet Only Finance/Financial Services 10 of 13

Links to key external standards Related Documents: Training Need Identified? Not applicable Employment Rights Act 1996 Trust Standing Financial Instructions No Version Control Table Date October 2008 Version Summary of Changes No V1 Approved November 2008 as Final version. Review I year after adoption and then every 2 years 17.05.2010 V2 No Amendments refresh 1 Year after adoption 06.06.2012 V3 Full review of Policy and Procedure and update to new format as required Changes Made by (Name and Job Title) Original Sarah Gould Adam Wheeldon Garry Cooper 23.06.2015 V4 Full review of Policy and Procedure and update to new format as required Sarah Gould All or part of this document can be released under the Freedom of Information Act 2000 This document is to be retained for 10 years from the date of expiry. This document is only valid on the day of printing Controlled Document This document has been created following the Royal Cornwall Hospitals NHS Trust Policy on Document Production. It should not be altered in any way without the express permission of the author or their Line Manager. 11 of 13

Appendix 2. Initial Equality Impact Assessment Form Name of Name of the strategy / policy /proposal / service function to be assessed (hereafter referred to as policy) (Provide brief description): The Trust s policy in relation to an employee or ex-employee receiving an under or overpayment of salary, allowances and benefits. Directorate and service area: Is this a new or existing Policy? Finance Existing Name of individual completing assessment: Garry Cooper 1. Policy Aim* Who is the strategy / policy / proposal / service function aimed at? Telephone: 01872 258029 To highlight to staff the Trust s policy in relation to receiving an under or overpayment of their salary, allowances or other benefits. 2. Policy Objectives* To clarify the Trust s policy in respect of salary, allowances or other benefit over or under payments. 3. Policy intended Outcomes* 4. *How will you measure the outcome? 5. Who is intended to benefit from the policy? 6a) Is consultation required with the workforce, equality groups, local interest groups etc. around this policy? b) If yes, have these *groups been consulted? C). Please list any groups who have been consulted about this procedure. Staff are fully aware of the Trust s policy and what is expected of them upon being under or over paid amounts due to them from the Trust. Regular monitoring of debts, by the Finance Department and through Audit reviews. The Trust and the Employees through greater clarity of what is expected from both parties when the situation arises. YES YES Representatives from Human Resources and Staff side representation. 7. The Impact Please complete the following table. Are there concerns that the policy could have differential impact on: Equality Strands: Yes No Rationale for Assessment / Existing Evidence Age 12 of 13

Sex (male, female, transgender / gender reassignment) Race / Ethnic communities /groups Disability - Learning disability, physical disability, sensory impairment and mental health problems Religion / other beliefs Marriage and civil partnership Pregnancy and maternity Sexual Orientation, Bisexual, Gay, heterosexual, Lesbian You will need to continue to a full Equality Impact Assessment if the following have been highlighted: You have ticked Yes in any column above and No consultation or evidence of there being consultation- this excludes any policies which have been identified as not requiring consultation. or Major service redesign or development 8. Please indicate if a full equality analysis is recommended. Yes No 9. If you are not recommending a Full Impact assessment please explain why. Previously not required Signature of policy developer / lead manager / director Date of completion and submission Karl Simkins Names and signatures of members carrying out the Screening Assessment 1. Garry Cooper 2. Sarah Gould Keep one copy and send a copy to the Human Rights, Equality and Inclusion Lead, c/o Royal Cornwall Hospitals NHS Trust, Human Resources Department, Knowledge Spa, Truro, Cornwall, TR1 3HD A summary of the results will be published on the Trust s web site. Signed Date 13 of 13