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Recovery of Overpayment of Wages

Recovery of Overpayment of Wages 

Employment Act 1955 Section 24 (2)

Scenario

  • HR make an mistake in overtime calculation of employee A.
  • This has result overpayment of wages to employee A.
  • Overtime paid in January 20xx payroll period
  • HR only encountered the error in May 20xx.

Question

By regulation, can HR recover the overpayment of overtime claim in May 20xx ?

Employment Act Section 24 (2)

  • It shall be lawful for an employer to make the deductions of any overpayment of wages made during the immediately preceding three (3) months from the month in which deductions are to be made
  • The overpayment of wages make by the employer’s mistake

 

Timeline on Scenario

 

  • The overpayment of wages can be deducted 3 months preceding to the month of intention to make recovery. 
  • Therefore, HR only can recover overpayment up to February 20XX.

 

Conclusion

HR is disallow to recover January 20XX overtime overpayment from employee’s May 20XX payroll

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