Policy
Payroll overpayments occur when an employee is paid for hours s/he did not work or was paid at an incorrect rate. The University will attempt to collect any overpayment made to an employee regardless of the amount. Employees who have been overpaid are expected to repay any monies owed. While the University is committed to collecting all overpayments, the following procedures are meant to minimize the hardship on the employee where possible.
Purpose
The purpose of this policy is to ensure the accurate and timely recovery of any amounts overpaid to employees through the Payroll system, whether the employee is active or terminated.
Scope
This policy applies to all employees who have been paid or are being paid through the Payroll system and applies to all funds including research grants.
Scholarship payments made to students through the Payroll system are excluded from the scope of this policy.
Procedure
Human Resources will manage the recovery of all funds related to payroll overpayments.
Overpayment Recovery
The following procedures apply to both active and terminated employees.
Once an overpayment is discovered, Human Resources will calculate the amount of the overpayment and notify the employee. Human Resources will send a letter informing the employee of the cause of the overpayment and the gross and net amounts due. This letter will also include repayment options and will clearly indicate the point of contact in the Human Resources Office. A copy of the repayment scheduled will be forwarded to the Business Office in order to track the repayment.
The employee will be given the choice of providing a personal cheque for the full net amount (plus any amount paid on his/her behalf to the University, such as tuition) or of having payroll deductions taken for the gross amount from their pay cheques.
Payroll Deduction
For repayment by payroll deduction, the following conditions apply:
- The employee must provide Human Resources written authorization to make the deduction(s) from the employee’s pay.
- Repayment amounts and payment structure is reasonable relative to the amount owing and length of overpayment period.
- Per-pay repayment amounts cannot exceed 20% of the employee’s net salary (subject to Wages Act, R.S.O. 1990, c. W.1, s. 7 (2)).
- If an overpayment occurs in one pay period and is discovered in the current or next pay period, the full amount of the overpayment will be collected in that subsequent pay period.
- If an overpayment occurs over a number of pay periods, repayment should be made over the same number of pay periods.
- As required, repayment schedules may include financial hardship considerations (see “Financial Hardship” below).
- In accordance with Canadian Revenue Agency Income Tax reporting guidelines, repayment schedules should conclude by calendar year end (i.e. December 31st) where possible. If the full net amount is not paid in the calendar year, then the employee must pay the outstanding gross
amount in the subsequent calendar year. - In situations where negotiations are underway for an employee regarding a severance or grievance settlement, any outstanding overpayments should be considered in those negotiations.
Remittance by Cheque
Cheques must be made payable to Carleton University and remitted to Receipt Accounting, Business Office. A receipt of payment will be emailed from Receipt Accounting to the employee with a copy to Human Resources. A letter confirming the clearance of the debt will be sent to the employee by Human Resources after the overpayment has been fully repaid.
Financial Hardship
Financial hardship is a true inability to make repayment based on income and legitimate family and personal expenses, which includes:
- Expenses for food, housing/rent, clothing, transportation, or utility costs
- Reduction in hours of work
- Illness or disability issues
- Other expenses outside of one’s control
Requests for financial hardship consideration should be directed to the Assistant Vice-President, Human Resources. Proof of financial hardship (e.g. bank statements) will not be requested.
Failure to Respond
If no payment or repayment agreement is received within six weeks of the initial contact, a second notice will be sent to the employee. If still no response within a further three weeks, a final notice will be sent stating that if payment or an agreement is not received within one week, the file will be sent to a collection agency.
The University reserves the right to use any legal means to reclaim monies owing.