The company paid too much salary? It’s too early to open the champagne

In 2022, an ordinary employee of a Chilean meat plant mistakenly received an inflated payment from his employer – it was 330 times his salary. Initially, the man informed the company about everything and wanted to return the money. However, he thought it over and… disappeared. He became elusive to his employer, who eventually informed the police about the case.

The company paid too high a salary. What to do?

Such a big error by the accountant who ordered the transfer is an extreme situation. However, situations in which someone mistakenly pays too high an amount are not uncommon and result not only from the accountant’s carelessness. A problem may arise when the employer pays salaries in advance (this is the case with teachers and police officers). If the employee went on sick leave in the middle of the month, the remuneration paid will be overstated. Then there is also the need to return it.

An employee who has received an inflated salary mentally opens a bottle of champagne, but it is not certain that he will keep the excess for himself.

Once the company realizes that there has been a misunderstanding, it cannot independently decide to deduct the overpayment from subsequent remuneration tranches. The regulations require the employer to have a written statement from the employee that he or she agrees to such deductions. This document should indicate in detail the amount of the receivable and the method of its deduction.

An incorrectly paid salary is undue enrichment

What if the employee does not want to sign such a declaration? The employer’s only option is to take a civil action and submit the claim not to the labor court, but to the civil division. He will base his claim on Art. 405 of the Civil Code, which stipulates that “whoever, without a legal basis, obtained a financial benefit at the expense of another person is obliged to deliver the benefit in kind, and if this is not possible, to refund its value.”

The employer will have to prove that the employee was aware that he received a higher amount of benefits that he was not entitled to. In practice, this is not easy, because the employee may argue that he does not check his account regularly and did not notice a higher than usual transfer. He has unknowingly spent money and even if he wanted to, he has nothing to pay back, and the deductions will excessively burden his household budget. He will probably refer to Art. 409 of the Civil Code, which stipulates that “the obligation to deliver a benefit or return its value expires if the person who used it, consumed it or lost it in such a way that he is no longer enriched, unless when disposing of the benefit or using it, he should take into account with an obligation to return.

And since he was not aware of the error on the part of the company, he could not take into account the obligation to return it.

Minimum wage and deduction from salary

Yet another potential minefield for an employer is a situation where an overpaid employee earns the statutory minimum. Pursuant to Art. 87-§1 of the Labor Code, the minimum wage is free from deductions. If the provision is applied literally, the parties cannot agree to deduct the overpayment from subsequent salaries. Situation without exit? Not really, because the employee can still agree to the deductions, which will be a great tribute to the company.

Once the parties have agreed on a way out of the problematic situation, the company must – on its own – correct the documents that were sent to the Social Insurance Institution so that the institution calculated the contributions correctly.

As you can see, one mistake leads to many problems. That is why precision and careful verification of each transfer by an accountant is so important.