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Employer has been overpaying my salary for 1.5 years! Help!


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Hi, i really need some advice...

 

Recently my employer called me into a meeting to verbally advise me that the company has been overpaying my salary for over a year, and i have been overpaid somewhere within the region of 10k! They have also advised that they want me to pay them back.

 

I am 20 years old, live on my own in rented accomodation, and already 7k in debt without this added 'extra'. My employer has asked that i come to them with a proposed figure that i can afford to pay back each month- main worry here is the fact that my wages have now gone down to what they were supposed to be, and my outgoings are slightly over what i have coming in each month at the moment.

 

The company have also advised that the debt would be written off if i left the company.

 

At the moment the company is trying to make me accept responsibility of the overpayment as trhey say i should have noticed. I noticed an increase in salary after being advised that i was receiving a 1k payrise, but never suspected it was this much! I am not as responsible as i should be, so never check bank statements or balances and my wage slips go to my mother's address. I'm a normal young person unfortunately- get paid, spend money until i can't withdraw any more cash!

 

Within the last year i've moved into rented accomodation and taken out an additional loan.

 

Based on all these things, do i have any leg to stand on at all? Will i end up being liable for the full amount?

 

Any advice will be much appreciated

 

thanks

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Read this which I found on another site...

 

If you have more money in your wages than you are expecting, don't be tempted to keep quiet about it. As soon as your employer realises that an error has been made, you will be asked to repay the money and, in general terms, your employer is entitled to take it back from your next wages. It is better to query the overpayment immediately and come to an arrangement to repay the money rather than find yourself in legal difficulties in the future, with the presumption that you were being dishonest because you said nothing.

 

So, contact your payroll office and ask them to confirm whether or not the pay is correct. If they confirm that the payment is correct, they are unlikely to be able to recover the money if they later discover that it is not correct.

 

What is your employer's legal position on discovering that you have been overpaid? Can the overpayment simply be recovered from your next wages? The "protection of wages" rules in the Employment Rights Act 1996 provide clear rules about making deductions from wages. In general, deductions may only be made from wages if the law permits it, or if your contract of employment specifically permits it, or if you and your employer have made a written agreement that permits it.

 

However, the important point to understand is that the protection offered by the Act does not extend to an overpayment of wages or expenses. An overpayment is specifically excluded from protection. This means that, if your employer recovers the overpayment from your later wages, you cannot complain to an employment tribunal that your employer has made an unlawful deduction.

 

You could, however, sue your employer in a civil court, e.g. the small claims court. That would depend, of course, on whether you thought it was unfair and unreasonable for your employer to recover the overpayment. And that is the issue that your employer has to consider before recovering an overpayment by deducting it from your wages - is it reasonable in all the circumstances to make the recovery?

 

What factors would a civil court take into consideration if you were to sue your employer for an amount of money deducted from your wages?

 

===>In the employer's favour is the principle of "unjust enrichment" - a general view taken by courts that a person should not benefit from another's mistake.

 

===>In the employee's favour is the principle of "change of position" - that the employee's circumstances do not make it reasonable for the money to be recovered, for example, because you were told on querying the payment that it was correct, or you spent or committed the money in the valid belief that you were entitled to it.

 

But don't think that, just because you've spent the money, that makes it unreasonable for the employer to recover it.

 

If you are still in the employment where the overpayment occurred

 

On discovering an overpayment, a good employer should immediately contact you, explain the problem and tell you that the money will be deducted from your next wages. But you should expect your employer to check with you that, by doing so, you will not find yourself in financial difficulties. If a full recovery would cause you problems, your employer may suggest recovering the overpayment in instalments, or taking the full amount of the overpayment and giving you a short-term loan that you would then pay off in instalments.

 

However, if you still feel that it is entirely unreasonable for the recovery to be made from your wages, you should make use of your employer's grievance procedure. If you raise the grievance before the recovery is made, the employer should wait until the grievance is resolved. If your employer goes ahead with the recovery, you may be able to take your employer to court, but not before following each stage of the grievance procedure precisely, including the appeal procedure if necessary.

 

To obtain advice on suing your employer in court, you should discuss the situation with a solicitor, or Citizens Advice, or another local organisation providing advice on legal, employment or tax matters.

 

You must remember that, in the case of an overpayment of wages or expenses, you do not have any employment protection. Your employer is entitled to recover the money without your permission, but must do it in a fair and reasonable manner. If you were not entitled to the extra money in the first place, you and your employer should work together to correct the situation.

 

If you have left the employment where the overpayment occurred

 

In this situation, your former employer is unable to make a deduction from your wages. But what if, some months or years later, your former employer, or even a debt collector, contacts you claiming that you owe money that was overpayed in the former employment? Much will depend on what was stated in the employment contract. Some contracts state that, if an employee leaves the employment owing the employer money that could not be recovered from final wages, the amount owed becomes a civil debt. If there is no contractual provision to treat the alleged overpayment as a civil debt, the employer may have considerable difficulty in enforcing payment if you refuse to cooperate. In either situation, you should obtain advice from a solicitor, or the Citizens Advice or another local organisation providing advice on legal, employment or tax matters.

 

If you feel I've helped then by all means click my star to the left...a simple "thank you" costs nothing! ;)

 

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If you can show your good faith in the matter and that you really quite honestly did not notice the overpayment and that it would cause you problems to repay it then you could rely on a legal device called "promissory estoppel" which effectively prevents the employer from claiming back his money.

It does sound as if your employer is acting very decently so far. They haven't immediately started deducting money. They have invited you in for a meeting to discuss a repayment scheme. This is a model approach from them.

If you refuse to repay, then they could force the deductions on you or fire you and then either write the debt off or sue you for it. If they sued you then you could raise the estoppel defence. Of course you would have to convince the court.

£10k for about a year is a lot of money not to notice. Your explanation sounds reasonable enough but it is the court you have to convince.

 

Howeve, the company has also indicated that if you leave then they will write the debt off.

It sounds as if they are asking you to leave.

Do you want the job?

If you stay and don't pay, and they accept this then it may sour relations for a long time.

You have a lot to think about.

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First check that this overpayment actually occurred. This means they paid more than the contracted rate, not just that they've changed their minds about what salary to offer. There have been a few employers lately claiming the latter constitutes an overpayment, but it doesn't.

 

Once you have checked it occurred the above advice is good.

Post by me are intended as a discussion of the issues involved, as these are of general interest to me and others on the forum. Although it is hoped such discussion will be of use to readers, before exposing yourself to risk of loss you should not rely on any principles discussed without confirming the situation with a qualified person.

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  • 2 months later...

Oh my God!!!! I have just registered on this web-site today to ask for advice about a virtually identical situation. As I'm new to this site I need to get familiar with the tools but was hoping to bookmark this thread and create a thread of my own to seek advice about my situation, that way i could keep an eye on your situation and vice versa - could you tell me how i can bookmark this thread so that i can find it easily?

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