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Salary overpayment & recovery

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:confused: Anyone offer me some advice?


I was made redundant last December, however, my employer continued to pay my wages for January and now they are demanding back (about £2000) what they over-payed me by mistake.


The payment was made without my knowledge (no pay-slip) and I assumed it was my redundancy payout top-up (to include 2009 pay increase) and have spent the money.


I'm now no longer living in the UK and as am only working part time, am unable to pay back the rest of the money. I have made a one-off payment of £400, in the hope the company would ignore the rest of the debt, but they're now threatening legal action.


Can anyone give me some legal advice on this issue:


Do I have to pay back the remaining overpayment?

If I'm out of the country, can the company bring legal action against me?

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In most cases, the employer will be entitled to recover overpayments from the employee, and the employee will have difficulty in successfully suing the employer in the courts. An employee may also be liable for possible court costs in pursuing her/his employer through the courts, should the employee lose.


In a minority of cases, the employer may not be able to legally reclaim an overpayment where:-

  • s/he gave the impression that the payment was correct; and
  • the employee could not have reasonably realised that there had been an overpayment; and
  • the employee has 'changed her/his position' as a result of receiving the money. For example, s/he may have made financial commitments that s/he otherwise wouldn t have made, so that if s/he were forced to pay the money back, s/he would be in a worse position than if the overpayment had not been made (endnote 1). This is a complex area of law and this argument will only rarely succeed - see below.


Where the circumstances above apply, the employee could argue that because s/he has changed her/his position, s/he should not be required to repay the overpayment.


The mere fact that the employee has spent the money in good faith does not necessarily mean that s/he has changed her/his position and therefore does not need to repay the overpayment. For example, if the employee uses the overpayment to pay off a debt that s/he would have had to pay off anyway, this will probably not be a change of position (endnote 2).


Each case will depend on the individual circumstances. If an employer insists on repayment, a client should seek specialist advice.


However as you now live abroad it is unlikely that any recovery action would succeed unless you have UK assets.

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Thanks for that info, very useful. Sounds like it's an area which can be argued on both sides. Some of those points apply to my case (I guess buying an engagement ring is a change of position) but I'd rather keep this matter out of the courts, which I fear means re-paying the full amount.


The other option is to avoid recovery by living out of the country. I do (jointly) own a house in the UK though and would someday like to return :-)

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