RECOVERY OF DEBT IN RESPECT OF SALARY OVERPAYMENTS

RECOVERY OF DEBT IN RESPECT OF SALARY OVERPAYMENTS Date: 16 May 2018

Overview of Salary Overpayment Debt 2014/15 to 2016/17 • • • The debtor type continues to increase in number of incidences as wells as Rand value. Growth of debtor type mainly due consistent number (400+) of new salary overpayment incidences registered annually. The debt write offs are possibly on the conservative side considering the ageing of this debtor type (2016/17: R 5. 4 m > 1 year) © Western Cape Government 2012 | 2

Recovery Process • Once salary overpayment is identified: o Debtor informed in writing within 10 working days of Departments intention to recover funds o Relevant finance office instructed to create debtor. • In service debt (i. e. current employee) o Recovered by debit order via PERSAL o No interest charged unless mala fides present o Out of service debt (i. e. ex-employee) o A portion or total debt can first be recovered from any benefits (i. e. leave pay) still owing to debtor or from their termination pension benefit (debtors consent required). o The balance of the debt is then recovered via an agreed instalment plan o Interest charged programmatically charged at prescribed rate (currently 10. 5%) o If no response from Debtor, then letter of demand issued requiring response within 21 days o Thereafter debts > R 2000 will be handed over to debt collector (Vericred) o Debts <R 2000 are deemed uneconomical to recover and are consequently written off. © Western Cape Government 2012 | 3

Recovery Process Obstacles • • Greatest obstacle is the delay between the occurrence of the salary overpayment and the registering thereof as a debt on the financial system(BAS) The time lapse reduces the probability of recovery by the department as well as debt collector once handed over. This can be illustrated by analysing R 1, 1 m Salary Overpayment Debtors written off in 2016/17: The route causes of the delay is mainly due to: • The late detection of the actual salary overpayment incidences • Incorrect application of Departmental policy by officials (Policy to be updated and recirculated to relevant officials) © Western Cape Government 2012 | 4

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