Correcting a payroll error: overpayment, back pay and procedure

Quick answer. An overpayment is an undue amount the employer may recover (Article 1302-1 of the Civil Code), but the deduction from future salaries is in principle limited to 10% of net pay absent the employee's written agreement. Conversely, an omission is corrected by back pay. In both cases, the action is time-barred after three years (Article L3245-1) and the correction goes through a corrective payslip and a corrective DSN.

A forgotten variable, a wrong rate, a double payment: no payroll is immune to error. What distinguishes a calm company from an exposed one is the correction procedure: do you know how to recover an overpayment without upsetting the employee or the law, pay back pay, and correct the declarations?

This article sets out the steps. To distinguish an overpayment from an advance, see our article on the salary advance; to read the relevant lines, see understanding a payslip.

The overpayment falls under recovery of the undue (Article 1302-1 of the Civil Code): the employer's error does not deprive it of its right to restitution. Back pay, however, is owed to the employee and must be corrected promptly.

The employer may recover an overpayment, but not in any way:

1. Inform the employee in writing (nature of the error, amount, terms).
2. Prefer a written agreement on the repayment schedule.
3. Failing an agreement, deduct at most 10% of net pay on each future payslip (the limit admitted by case law for set-off on salary).
4. Trace each deduction on the payslip (dedicated line).

The 10%-of-net deduction is not the attachable portion for wage garnishment: it is the limit of the set-off the employer makes on an undue amount, save a written agreement allowing more.

When the error harmed the employee (forgotten variable, collective rate not applied), the employer issues back pay: the amount owed appears on a payslip, in an identifiable rule (for example "back pay"), with the corresponding contributions. Back pay is subject to contributions and withholding tax like a salary.

Any correction is reflected in the declarations:

• Corrective payslip: it materialises the correction (overpayment deduction or back pay) and makes it legible for the employee.
• Corrective DSN: if the relevant month's DSN is already filed, a corrective DSN adjusts bases and contributions within the deadlines; beyond that, a correction is made on the next DSN. See the role of the corrective DSN in the payroll cycle.

Salary-type amounts are time-barred after three years (Article L3245-1 of the Labour Code). This limitation works both ways: the employer cannot claim an overpayment beyond three years, and the employee cannot claim back pay beyond the same period (subject to the rules on the starting point). Acting quickly remains preferable, for the relationship as for cash flow.

Employee who has left. Recovering an overpayment from a former employee falls under recovery of the undue; failing amicable repayment, an action before the labour tribunal is possible within the limitation period.

Large overpayment. Stagger by written agreement; the 10%-of-net limit protects the employee against an abrupt deduction.

Error on contributions or withholding tax. Correct via a corrective DSN; the feedback will reflect the adjustment.

The best correction is the one you avoid: a reliable variables file, controls before payment and a payslip review prevent most overpayments and omissions. When the error occurs anyway, speed and transparency are the best allies: the closer the correction is to the error, the simpler it is to explain to the employee and to declare, and the less it weighs on the working relationship. Keep a written trace of each step (diagnosis, information, agreement, deduction or payment): in a dispute, it is this traceability that makes the difference before the labour tribunal.

1. 10%-of-net limit without the employee's written agreement to recover an undue amount.
2. Systematic writing: informing the employee and, ideally, a staggering agreement.
3. Legible corrective payslip: a dedicated line, not a hidden deduction.
4. Corrective DSN within the deadlines; beyond that, correction on the next DSN.
5. Three-year limitation: act without delay.

Most overpayment disputes arise less from the law than from form: a deduction made without explanation, on a single payslip, weakens the relationship and exposes the employer. The winning reflex is writing: inform, propose a schedule, respect the 10%-of-net limit absent agreement. Conversely, owed back pay must be paid without hesitation: it is a matter of compliance as much as trust.

As a chartered accountant registered with the French Ordre des experts-comptables, I recall that the employer's error does not cancel its right to recover an undue amount (Article 1302-1 of the Civil Code), but that this right is exercised within a framework — deduction limit, limitation period, traceability. Document each correction: it is your best protection.

Hayot Expertise advice. Faced with an error, first make the diagnosis (overpayment or back pay), then formalise it in writing. For an overpayment, propose a schedule and do not exceed 10% of net without agreement. Correct the payslip and the DSN right away. A traced and explained correction is almost always settled amicably.