What to do when payroll gets your pay wrong

If payroll has paid you too little, raise it in writing with your manager and payroll straight away and ask for the shortfall in the next pay run; if they will not correct it, use your employer’s grievance procedure, then Acas. If you have been paid too much, tell payroll and do not spend the extra, because employers can lawfully recover overpaid wages. Either way the tax, National Insurance and pension deductions usually follow the corrected pay, but not always cleanly, so ask for a written breakdown.

Spotting the error

Most payroll mistakes in schools, councils and the NHS come from a form that arrived late or was keyed wrongly. Common ones are:

• a new starter paid on the wrong spine point or band step
• an increment or pay award not applied
• overtime, enhancements or extra sessions missing or duplicated
• pay continuing after you left, cut your hours or went onto half pay
• a change to term-time-only or part-time hours not entered
• the wrong tax code or pension tier.

You have a legal right to an itemised payslip, and it must show hours where pay varies with time worked. Compare it with your contract and any letter confirming a change. How to read your payslip goes through each line, and the take-home pay calculator gives a rough check on whether the net figure is in the right range.

If you have been underpaid

Email payroll and your line manager together. Give your name, employee number, the pay date, what you were paid, what you think you should have been paid and why (the pay point, the hours, the claim form). Keep a copy. Payroll can often add arrears to the next pay run, and many will make an off-cycle payment if the shortfall is large.

If the employer disputes it or simply does not act, the next step is a formal grievance; see raising a grievance. Underpayment of wages can also be an unlawful deduction claim at an employment tribunal. Before you can claim you normally have to go through Acas early conciliation, and since 1 October 2026 the time limit for most tribunal claims is six months, up from three. Where the shortfall takes you below the National Living Wage of £12.71 an hour (for those aged 21 and over), see minimum wage underpayment.

If you have been overpaid

Deductions from wages are lawful only if required by law, agreed in your contract or agreed in writing in advance, but overpaid wages are an exception that employers can recover. Public sector employers usually have a written overpayment policy that sets out how they will contact you and how long you get to repay. Ask for:

• a written statement of how the overpayment arose and over which dates
• the gross and net amounts, and which one they want back
• a repayment plan you can afford, spread over several months if needed.

If the employer wants to take it all from one pay packet and that would leave you short, say so in writing. Overpayment of salary covers your rights in more detail.

What happens to the tax

PAYE on a normal cumulative code (such as 1257L) works out tax on your pay for the year to date. If an underpayment is corrected in the same tax year, the arrears are added to the month they are paid. The tax taken that month may look high, but the calculation is based on the year to date, so you end up paying roughly what you would have paid if the money had arrived on time. How backdated pay awards are taxed explains the same mechanism for pay award arrears.

An overpayment recovered in the same tax year can be reversed through payroll: the employer reduces your gross pay and the tax and NI are recalculated, so you repay the gross amount but get back the tax you paid on it. If the error is only found after 5 April, it is more complicated. Employers handle it in different ways, and the amount they ask for may be the net figure or the gross figure with a separate tax adjustment. Ask payroll to explain in writing which method they are using. If the tax position still looks wrong once the money has been repaid, HMRC can check your record for the year.

National Insurance, student loan and pension

These deductions do not behave like income tax. Employee National Insurance is worked out on each pay period separately, so arrears paid in one month are charged at that month’s rates. A large lump can push part of that month’s pay above the monthly upper earnings limit of £4,189, where the rate falls from 8 per cent to 2 per cent. Student loan deductions are also calculated per pay period.

Pension contributions should follow the corrected pensionable pay. If you were underpaid, contributions on the arrears are normally taken when they are paid. If you were overpaid, the scheme contributions on the overpayment should be reversed too. Check the pensionable pay figure on the payslip after the correction, and contact the scheme if your annual benefit statement does not match.

Who to contact

• Payroll and your line manager, in writing, first.
• HR, if payroll says it needs authorisation it has not received.
• Your trade union, which can raise it formally and represent you at a grievance hearing.
• Acas, for free advice on the law and for early conciliation before any tribunal claim.
• HMRC, if the problem is your tax code or tax for a past year, through your personal tax account or the HMRC app.