If we let an employee go but continued to pay them by mistake, do we have any recourse to recover the overpaid funds? Our business is located in Alberta but the employee is located in Ontario.
I apologize for keeping you waiting for 3 days and will send a reply just as soon as I hear back from our payroll expert. Thank you for your patience.
I FINALLY got an answer for you. Sorry it took so long and I hope it helps. It comes from our payroll expert, Alan McEwan:
There’s no alternatives other than asking the employee nicely to return the funds or to take him or her to small claims court.
However, the overpayment is not reportable as income on a T4 and no source deductions need to be remitted to the CRA in relation to the overpayment. You can reduce subsequent remittances (within the same tax year) to recover anything already remitted.