£16,000 Instead of £1,600: Recovering Overpaid Commission

One of us on the Commit team was once paid £16,000 on a commission run instead of £1,600. A single misplaced decimal, ten times the correct figure, straight into a personal current account. Neither the rep nor the company spotted it for a week or two. It was only reported because the rep raised it.

That's the uncomfortable part. If a 10x error can sit unnoticed in a live payroll cycle, the number of £40, £300 and £900 errors quietly clearing every month across UK sales teams must be enormous — and nobody is reporting those.

TL;DR: A UK employer can generally recover overpaid commission, because section 14(1)(a) of the Employment Rights Act 1996 switches off the usual ban on deductions from wages where the purpose is to reimburse an overpayment. That right is not unconditional: Acas says the employer must tell the worker and agree how the money comes back, and the employer must be able to show an overpayment actually happened. The clean fix is a same-tax-year payroll correction — updating year-to-date figures on a Full Payment Submission, per GOV.UK's payroll errors guidance — because that unwinds the PAYE and National Insurance as well as the cash. Cross a tax-year boundary or lose the employee and the recovery gets materially harder and more expensive. Under section 5 of the Limitation Act 1980, civil recovery of a simple debt generally runs to six years, but practical recoverability collapses long before that.

Overpaid commission is not a clawback — and confusing the two loses arguments

The single most common mistake UK sales orgs make here is treating a commission overpayment as a clawback. They are legally different animals, and the difference decides whether you get the money back.

An overpayment is a payroll or calculation error: the plan says £1,600, the payslip said £16,000. Recovery rests on section 14(1)(a) of the Employment Rights Act 1996 and on restitution — you don't need a plan clause to ask for it back.

A clawback is a plan term: the deal cancelled, the customer churned in month three, the invoice went unpaid. There was no error. Recovery there depends entirely on whether your scheme documents and contract of employment authorise it, which is why a written clawback policy matters so much.

An overpayment is an error you can recover as of right. A clawback is a promise you can only recover if you wrote it down.

If you send a rep an email saying "we're clawing back £14,400" when what actually happened was your spreadsheet fat-fingered a decimal, you have picked the weaker legal footing and invited a dispute about plan terms you may not win.

Can a UK employer legally recover overpaid commission?

Yes, in most circumstances. Section 13 of the Employment Rights Act 1996 stops employers deducting from wages unless the deduction is authorised by statute, by a written contractual term, or by the worker's prior written consent. Section 14(1)(a) then carves out deductions whose purpose is "the reimbursement of the employer in respect of an overpayment of wages", made for any reason. Commission is wages, so a commission overpayment sits squarely inside that carve-out.

The carve-out is narrower in practice than employers assume. In one employment tribunal decision on section 14, the judge noted that it is for the employer claiming the exemption to show it applies — the tribunal has to make findings of fact that there really was an overpayment before its jurisdiction is ousted (Martin-Harris v West Midlands Ambulance Service, 2023). If your commission calculation lives in a spreadsheet nobody can reconstruct, proving "this was the correct number and that wasn't" is exactly the thing you can't do.

Acas guidance on handling overpayments is blunt about process: contact the worker as soon as you know, don't deduct without telling them, and agree how the money is repaid — being flexible where the sum is large or built up over time. HMRC's National Minimum Wage Manual confirms that recovering an accidental overpayment of wages does not reduce National Minimum Wage pay for compliance purposes (NMWM11140) — so a recovery deduction won't create an NMW breach, though it can still create genuine hardship you should manage.

What does a commission overpayment actually cost to unwind?

Here's the £16,000 error modelled out. Say the rep is on a £55k base plus commission, so firmly a higher-rate taxpayer, and the correct commission was £1,600 gross.

Line	Amount
Commission paid	£16,000
Commission actually earned	£1,600
Gross overpayment	£14,400
Income tax and employee NIC withheld on the excess (illustrative: 40% + 2%)	£6,048
Cash the rep actually received	£8,352
Employer's NIC paid on the phantom earnings (at the current secondary rate)	material, and cash already out the door

Those tax assumptions are illustrative — confirm the current bands and thresholds on GOV.UK's income tax rates page before modelling your own case, and remember pension contributions on the excess travel with it if commission is pensionable.

The mechanics matter more than the arithmetic. The rep received £8,352, but owes back £14,400 gross. If you correct this inside the same tax year, GOV.UK's payroll errors guidance lets you update the year-to-date figures on your next regular Full Payment Submission (or send an additional FPS marked "H – Correction to earlier submission"), and the over-deducted PAYE and NIC unwind through the payroll — so the rep's net position is made whole and you recover the gross.

Cross the 5 April boundary and it changes character. For National Insurance mistakes in earlier years, GOV.UK directs employers to submit a corrected FPS and — where you deducted too much NIC and still owe the employee a refund, for example because they've left — to write to HMRC's National Insurance Contributions and Employer Office marking the letter "Overpaid NI contributions". That is weeks of correspondence to fix a decimal point.

What are the options for recovering an overpayment?

Route	When it fits	Watch out for
Reverse before the payment lands	Error caught pre-BACS or pre-payroll cut-off	Requires reconciliation before submission, not after
Net off against the next commission run	Small error, rep still employed, error caught in the same tax year	Tell the rep first and show the corrected calculation
Agreed instalment plan	Large sums, or overpayments built up over several months	Get it in writing; consider hardship and wellbeing
Deduct from final pay	Rep resigning, overpayment discovered during notice	Interacts with notice-period commission entitlement; final pay may not cover it
Civil claim	Former employee refuses to repay	Acas points employers to a court claim; weigh cost against the sum
Write it off	Small value, weak evidence, or the rep was assured it was right	Then fix the control, or you'll repeat it

Why do commission overpayments go unnoticed for weeks?

Because almost nobody is independently checking the number in the direction that matters. Reps check their commission hard when they think it's low — that's what shadow accounting is: a rep's private spreadsheet built to catch underpayments. Very few reps run the same forensic check when the number comes in high, and finance is reconciling to the payroll total, not to per-deal logic.

The result is a structurally asymmetric error-detection system. Underpayments get reported within days by the person affected. Overpayments rely on the same person volunteering against their own interest, or on a finance reconciliation that most teams only do at quarter end. Errors of both types are common, but only one type gets escalated — which is why commission calculation errors tend to be discovered in batches during a quarterly review rather than in the week they happen.

In practice, overpayments cluster around three specific triggers:

• Paying on signing-day gross value. A deal signs at £120k total contract value with a 30-day opt-out window and a three-month ramp. Finance, rushing payroll, pays commission on the headline number. The value actually locked in was lower, and the recovery fight starts a month later. Commission should be calculated on what's contractually locked in, not the signing-day total.
• Deals above roughly £100k. Past that size, mid-market contracts stop being clean closed-won numbers — custom clauses, opt-outs, security reviews and legal redlines appear. Comp logic that survives a £10k 14-day SMB deal does not survive a £350k multi-threaded one, and that's exactly where errors hide.
• Manual re-keying between systems. Every hop from CRM to spreadsheet to payroll is a decimal-point opportunity. Ours was one of those.

What should you do in the first 72 hours?

On that last point: the fix isn't more diligence, it's removing the manual step. A commission-to-payroll reconciliation that runs every cycle, feeding a clean Xero export rather than a re-keyed spreadsheet, catches decimal errors before they become recovery problems. Recovery is always more expensive than prevention — legally, administratively, and in the trust you spend asking a rep for £14,400 back.

How long does an employer have to recover overpaid commission?

For a civil claim, section 5 of the Limitation Act 1980 sets six years from when the cause of action accrued for actions founded on simple contract, and section 32 can postpone the clock where a claim is based on a mistake. But treating six years as your window is a mistake: the longer an overpayment sits, the stronger the employee's argument that they reasonably believed the money was theirs and have changed their position.

Running the clock the other way, if a worker believes a deduction was unlawful, Acas notes they have three months less one day from the date of the deduction (or the most recent in a linked series) to bring an employment tribunal claim. So a botched unilateral deduction can generate a claim against you inside a quarter, while your own recovery window quietly narrows in practical terms.

Frequently Asked Questions

Can an employer deduct overpaid commission from my next payslip without asking?

Legally, section 14(1)(a) of the Employment Rights Act 1996 means the usual ban on unauthorised deductions doesn't apply to recovering an overpayment of wages. But Acas guidance says an employer should not deduct money without letting the worker know first, and should agree how it will be repaid — so a silent deduction is poor practice even where it isn't an unlawful one.

Does the employee repay the gross or the net overpayment?

The employer is out the gross amount, but the employee only ever received the net. Where the correction is made in the same tax year, GOV.UK's payroll errors guidance lets the employer correct the year-to-date figures via a Full Payment Submission so the tax and National Insurance unwind through payroll. Across a closed tax year it becomes a separate exercise with HMRC, which is why speed matters.

Can an employer recover overpaid commission from someone who has left?

Yes. Acas advises contacting the former worker, explaining why the money is owed and how much, and says that if they refuse to repay the employer may be able to make a court claim to recover it. Whether that's worth doing depends on the sum and the strength of your calculation evidence.

Is an overpayment the same as a clawback?

No. An overpayment is an error in calculating or processing commission, recoverable under section 14(1)(a) of the Employment Rights Act 1996. A clawback is a contractual term that reverses correctly-paid commission when a defined event happens, such as customer cancellation or non-payment — and it only works if your scheme documents say so.

How do I know whether we have silent commission overpayments right now?

Re-run one historic commission period from source data — CRM close records, signed contract values, invoiced amounts — without looking at what was paid, then compare. Teams that do this for the first time usually find variances in both directions. The underpayments were already reported; the overpayments weren't.