Shift allowance overpayment

[manza1983]

I was moved from a backshift where i received a shift allowance onto a day shift. I informed my manager i was still receiving the allowance every month who advised me she would have it sorted. It is now 11 months down the line and i was informed my employer want to reclaim half of the allowance back. My dept head had previously said that i would not need to pay anything back as it was their error!
Where do i stand?
Do i have to pay this back even though i was honest throughout?
Any advice is very much appreciated!

[elche]

Overpayments of wages often occur. It is a common misconception that if the employee was honest, the employer cannot recover any overpayments. This is not true.

I spotted this excellent answer to an overpayments query on another thread, and have to say it is a concise and accurate summary of the position, and may prove to be of some help to you.

Whilst the Employment Rights Act gives an employee protection against unlawful deductions or non-payment of wages, the same Act also gives an employer an absolute right to recover salary overpayments at whatever rate they see fit. The ERA exempts overpayments of wages and there are no rules to dictate appropriate rates of repayment. Whilst good practice would suggest that significant overpayments should involve a discussion with the employee about a suitable repayment plan, this is by no means a rule.


The fact that the overpayment has occurred over a period of time and that you queried it may stand you in some stead to argue for a repayment plan, but you will need professional advice to confirm this. There is a defence of Estoppel which may apply, but for this defence to be valid, the case has to satisfy certain conditions:-

• the employer must generally have made a representation of fact which led the defendant employee to believe that he was entitled to treat the money as his own
• the employee must have, in good faith and without notice of the claim, consequently changed their position (eg spent the money)
• the employee must be innocent of fault in causing the overpayment
• the court must be satisfied that it would, on the facts of the individual case, be inequitable to order repayment

It might also be argued that for the employer to withold all salary until the overpayment has been rectified would be grossly unfair, and it may also constitute a breach of trust on the part of the employer which could give rise to a claim for constructive dismissal - however this would serve little purpose in terms of compensation.

Certainly you need to make a written representation to your employer to complain that since the overpayment was as a result of incompetence on their part and that the money has been innocently spent by yourself you consider it unacceptable to withold salary in order to recover the amount. Whilst you are quite prepared to agree a repayment schedule which you can afford, you simply cannot accept that you should now be put into debt as a consequence of their maladministration. There is already some dispute over the exact amount and this almost certainly needs some independant verification, and don't forget that there may also be tax implications - presumably you have paid tax and NI on the overpayment? How will that be accounted for?

Thanks to sidewinder for the italic text in this post.

[Zamzara]

But if they said you can keep the money then estoppel comes into play; see:

Central London Property Trust Ltd v. High Trees House Ltd - Wikipedia, the free encyclopedia

[elche]

I agree there is a possibility that estoppel may apply on the above facts. But of course we must remember that this is a shield not a sword and can only act as a defence. Thus, the reality is if the employer, starts recovery proceedings, then we will be in the unpleasant position of having to ‘run this defence’ at any eventual trial. If the amount owed is in excess of £5000 then if you lost you would be paying your employer’s legal costs on top. Take professional advice before attempting to run an estoppel defence.