What does the term overpayment refer to?

Overpayment refers to the situation where a payment made exceeds the amount that is actually due. This typically occurs when the employer unintentionally pays an employee more than what is stipulated in their contract, an invoice, or an agreed-upon figure. In the context of employment law, it often relates to salary payments, bonuses, or reimbursements. Understanding this concept is crucial because overpayment can lead to legal and financial implications, such as the necessity for the employer to recover the excess amounts paid.

In contrast, paying under an agreed amount signifies an underpayment, which is another issue altogether. Paying the exact amount due indicates compliance with the payment terms, while discounting from the total is a separate action related to adjusting the owed amount and does not apply to the definition of overpayment. Therefore, identifying overpayment is important for maintaining accurate financial records and ensuring that all parties adhere to agreed payment terms.