Can I prevent overpaying an employee who is leaving if we pay early in the month?

The date you pay an employee is in their contract of employment and you are in breach of contract if you pay late or don’t pay their full entitlement.  But what about if they’ve resigned and will leave at the end of the month – but your pay day is early? 

We had exactly this query recently because our client’s payday was 25th of the month, this fell on a Saturday and the employee was leaving on 31st.  Their reliability and attendance was poor and the client doubted they would turn up for the final five days – meaning they would be overpaid. They asked us for advice, and we had to tell them that, even when dealing with a leaver, you are in breach of contract if you withhold their pay for the extra days.  This would be an unlawful deduction of wages along with breach of contract and so not something we would recommend. 

However, in a pragmatic world, we recognise that clients want to protect themselves and the reality of this situation was that this wrote a leaver letter to the employee, telling them payment of the final five days would be withheld until their last day.  They stayed until the last day!  Also, remember that if the employee had disappeared for the last few days, they weren’t entitled to any pay and wouldn’t have had a claim. 

These things are a balance – but the only real protection comes from paying right at the end of the month, so think about your choice of pay day

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