Payroll Overpayment Recovery Letter

What is payroll overpayment?

Overpayment in the payroll occurs when the employee is paid more than what he is supposed to be paid. This happens in the case of those employees who are paid on an hourly basis and their hourly rate of work is not calculated correctly. When this happens, the employer of HR of the company writes the payroll recovery letter to the employee.

What is a payroll overpayment recovery letter?

When an employer pays the employee more than expected, he will write the payroll overpayment recovery letter to the employee. Through this letter, the employer tells the employee that the extra money that has been paid to the employee will be recovered from him. There are differences in which the recovery of the overpayment occurs. The employer is required to specify the way in the letter in which he will recover the money from the employee.

Importance of writing the payroll overpayment recovery letter:

It is the policy of the company to recover the money from the employees whenever they are paid extra. So, employees are also required to report to the HR department when they see that their salary is more than expected in the payroll. Most of the companies do the recovery of the money by deducting the overpaid amount from the future wages.

This letter is written to let the employee know that the company has paid him extra money by mistake and the company will recover it from the employee. This information is important to be communicated because when you deduct the salary of the employee next time for compensation, the employee might open a dispute over it.

How to write the payroll overpayment recovery letter?

In case you need to draft a well-written letter, we have some useful tips for you to help you:

  1. While you write this letter, you should tell the employee that you are apologetic on behalf of the company because the error in the payroll has caused inconvenience to many people at a time.
  2. If you have received the complaint letter from the employee in which he has informed you about the overpayment, you should tell him that you are working on his complaint and that the issue will be resolved as soon as possible. Additionally, you can also appreciate the employee for being so honest.
  3. If you want to explain things in more detail, you can specify that how much overpayment was made to the employee. Although you don’t need to specify this in the letter.
  4. Tell the employee that how you will recover the extra money you have paid to the employee. If you want the employee to pay you back, specify this in the letter. If you want to deduct this money from his future salary, do mention it in the letter also.

Sample letter:


Name of the employee:

Department of the employee:

Subject: payroll overpayment recovery letter

Dear Mr/Mrs. ABC,

This letter is being written to inform you that we have seen overpayment in your payroll. We also received the letter from your side in which you have reported that you have been paid more than the expected payroll. We appreciate your honesty. I am sorry for the inconvenience that you have faced because of the miscalculation. We have hired a new accountant who does not know much about how to calculate the payroll of different employees. Due to this, many employees have been underpaid and some of them have been overpaid.

The company has its policy to deal with this situation. We will not ask you to pay us back the extra money. Please be informed that the extra money will be deducted from the wages of next month. We assure you that you will not have to contend with this kind of situation again. We are trying to settle things down and miscalculations in the payroll of any employee will not be seen again.

At the end, we would like to apologize again for the overpayment. Please feel free to contact us if you need to.


Yours sincerely,


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