Employers BACS Error / Account Suspended

[firstclassx]

Basically my employer paid in £1500 in February to a Halifax account that was seriously overdrawn.

 

In December 2011, I had informed my employer that further payments should go into a different (Natwest) account (and details provided).

 

Now, in January 2012, the payment went into the new and correct (Natwest) account. By this point Halifax had started to send me Debt Collection Letters on the overdrawn account/ default notices etc etc.

 

However, my employer changed their payroll system and when it came to the February 2012 payment, they had used the old Halifax account details to pay my wages into due to an oversight in the HR Dept. As the account was in default, and overdrawn, the account obviously swallowed the payment, and as Halifax had withdrawn my account access anyway, the money was as good as lost.

 

I informed my employer that they had paid into the wrong account due to an error on their part, and they agreed to make another payment to the correct account, which they did.

 

It now appears that they have been unable to reverse payment to the Halifax account and are my employer is coming after me for the duplicate payment.

 

What advice can you give me here? Am I liable for reimbursing my employer for their mistake? Does Halifax have to reverse a payment made in error?

 

Thanks guys.

 

(Incidentally, if anyone knows whether the £500 odd in unplanned overdraft charges made by Halifax is legal or not I'd be grateful to hear. £5 per day for being overdrawn).

Edited March 27, 2012 by firstclassx

[caro]

Just spotted this, so don't know if it's resolved now.

 

BACS payments can't usually be reversed unless claimed back very quickly, for example on the same day. I take it this didn't happen.

 

Where are you now on this?

 

Did the payment clear the overdraft to Halifax?

 

Are your employers asking for all of this at once, or over a period of time?

 

Regarding the bank charges, personally I'd say they aren't legal, but this is still to be proved in court. I wouldn't suggest that you try and claim them at the moment, unless you were to try on the grounds of hardship but this could be a bit of a long shot.

 

I'll move your thread to the employment forum where you may get more informed assistance on your employers erroneous actions.

[numbers666]

Interesting - forget the halifax account for the time being.....

 

i) you notified your employer of the change of details. The new details were used successfully on one occasion.

 

ii) the employer err'd and paid funds to the incorrect account the following month. They remedied this by making a further payment to the correct account.

 

iii) the correct action is for the employer to seek the monies back from the halifax as this was paid in error. The difficulty is you are the account holder and halifax have no intention of returning the money as this will create a od situation that is not currently being addressed.

 

iv) The company could not affect a BACS recall due to time lapsed, with the BACS payment system the receiving account is credited 3 days after the funds have left the sender - this is the time period that a recall from the originator can be issued, effectively the receiver will see both a credit and debit on the same date. Note this does not apply to FPS also part of BACS, as the funds are deemed received when sent (usually within 2 hrs).

 

v) a solution could be the company treat the second payment to you as a loan, and this is repaid over a set period, ie 6 months. This would be amicable as the employer caused the issue in the first place. The fact that you have no access to the funds @halifax is irrelevant and none of the employers business the reasons behind this. Technically they should as above seek redress to halifax and treat as a supplier mispaid.

 

vi) Yes you are liable, however your employer could be sympathetic as above or go for broke. You could mitigate some reduction for inconvience or the full sum would be due.

 

From direct dot gov.

Rules for making deductions from your pay

 

Your employer is not allowed to make a deduction from your pay or wages unless:

 

 

• it is required or allowed by law, for example National Insurance, income tax or student loan repayments
  
• you agree in writing to a deduction
  
• your contract of employment says they can
  
• it is a result of any statutory disciplinary proceedings
  
• there is a statutory payment due to a public authority
  
• you have not worked due to taking part in a strike or industrial action
  
• it is to recover an earlier overpayment of wages or expenses
  
• it is a result of a court order or Employment Tribunal decision
  

A deduction must not reduce your pay below the National Minimum Wage rate (except a limited amount for accommodation). This applies even if you have given your permission for it.

If you were overpaid in error, instead of making a deduction, your employer may try to recover the overpayment by making an application for a court order. For more information about how and when you might be able to prevent your employer from taking back an overpayment, you should speak to one of the following:

 

• a solicitor
  
• an Acas (Advisory, Conciliation and Arbitration Service) adviser
  
• a Citizens Advice Bureau adviser
  

If this applies -

 

Retail work: extra protection from deductions

 

If you work in retail (such as a shop or restaurant) you have extra protection against deductions from your wages. If there is a shortfall in the till or stock shortage, your employer is not allowed to take more than 10 per cent of your gross wages for a pay period. If the 10 per cent isn't enough then your employer can continue to take money from your wages on subsequent paydays. However never more than 10 per cent at a time.

An example

 

There is a shortfall of £50 in the till. Your employer wants to deduct this from your earnings. You are paid £250 per week before any deductions for tax or National Insurance etc (£250 gross pay).

Your employer can take ten per cent of your gross earnings. They must only take £25 one week and then make another deduction from your next pay cheque for £25.

If you leave your job, your employer can take the full amount owed from your final pay.

 

 

N

[firstclassx]

Hi Thanks for the responses.

 

The payment cleared my unauthorised overdraft, but still left me overdrawn by £100 or so, although no bank penalties/charges apply unless I exceed £250 so this isn't too bad really. I've since stopped using the account and they've not contacted me for a while.

 

My employer isn't being very specific over this, simply stating that it needs to be "recovered" ASAP.

 

I was considering writing a grievance against the Finance Dept for the distress caused by this, and then suggesting that I repay a nominal amount each week, so that it is paid off over the course of 1 year as my financial situation is delicate.

 

Would I be able to charge my employers, or seek a reduction in amount owed, for the additional administrative work I have done, like pleading with Halifax to return the funds etc?

 

Incidentally, if they insist on taking more than I can afford per week/pay period etc, can I refuse to pay and seek a court order which will take into account my circumstances and ability to pay?

[numbers666]

Hi Thanks for the responses.

 

The payment cleared my unauthorised overdraft, but still left me overdrawn by £100 or so, although no bank penalties/charges apply unless I exceed £250 so this isn't too bad really. I've since stopped using the account and they've not contacted me for a while.

 

- this good news in some respect - no charges and hassle

 

My employer isn't being very specific over this, simply stating that it needs to be "recovered" ASAP.

 

I was considering writing a grievance against the Finance Dept for the distress caused by this, and then suggesting that I repay a nominal amount each week, so that it is paid off over the course of 1 year as my financial situation is delicate.

 

- i would suggest an informal approach first ' hey you paid into the wrong account, so its your fault, but i can afford to pay x for y weeks ????'

 

Would I be able to charge my employers, or seek a reduction in amount owed, for the additional administrative work I have done, like pleading with Halifax to return the funds etc? - see how they take the offer of x per week first, they do pay your wages and employ you so the situation is delicate.

 

Incidentally, if they insist on taking more than I can afford per week/pay period etc, can I refuse to pay and seek a court order which will take into account my circumstances and ability to pay?

 

- no, but unless you agree to it or is in your contract terms, they cannot deduct - unfair deduction from wages and refer to ET

 

Remember they can themselves issue proceedings for recovery, clearly this would totally ruin the relationship.

 

However, going on the facts, they caused this, and IMHO they should accept the terms you are offering!

 

N

[elche]

I just wanted to clarify one small point on the above

 

From direct dot gov.

Rules for making deductions from your pay

 

A deduction must not reduce your pay below the National Minimum Wage rate

 

I know that direct.gov say the above quote here http://www.direct.gov.uk/en/Employment/Employees/Pay/DG_175878,

 

But I just wanted to point out that we looked at this a while ago here - http://www.consumeractiongroup.co.uk/forum/showthread.php?296236-100-wage-deduction-IS-THIS-LEGAL

 

and I am 99.9% sure they can make a deduction that could APPEAR to leave you with below the NMW.

 

Allow me to explain. You are paid monthly, and your ER pays you twice in January, once to Halifax and once to Natwest. Being unable to recover from the bank in Feb they pay you nowt.

 

Now it appears that you are paid below NMW for Feb BUT, I reckon your ER can argue that for the purposes of the deduction the pay reference period is 2 months and in that 2 months you have had 2 months paid even after the deduction.

 

Thus potentially an ER can deduct 100% of wages to recover a previous 100% overpayment.

 

Just wanted to make that one point alone and also say I think direct.gov can oversimplify things sometimes

 

Hope this is some help.

 

Che

[numbers666]

 

 

 

 

 

....Thus potentially an ER can deduct 100% of wages to recover a previous 100% overpayment.

 

 

 

Che

 

OMG - Shocking but true...

 

OP- I assume you have payslips with consequative (damn spelling) pay periods ??? with no deductions ?????

[Sidewinder]

I just wanted to clarify one small point on the above

 

 

 

I know that direct.gov say the above quote here http://www.direct.gov.uk/en/Employment/Employees/Pay/DG_175878,

 

But I just wanted to point out that we looked at this a while ago here - http://www.consumeractiongroup.co.uk/forum/showthread.php?296236-100-wage-deduction-IS-THIS-LEGAL

 

and I am 99.9% sure they can make a deduction that could APPEAR to leave you with below the NMW.

 

Allow me to explain. You are paid monthly, and your ER pays you twice in January, once to Halifax and once to Natwest. Being unable to recover from the bank in Feb they pay you nowt.

 

Now it appears that you are paid below NMW for Feb BUT, I reckon your ER can argue that for the purposes of the deduction the pay reference period is 2 months and in that 2 months you have had 2 months paid even after the deduction.

 

Thus potentially an ER can deduct 100% of wages to recover a previous 100% overpayment.

 

Just wanted to make that one point alone and also say I think direct.gov can oversimplify things sometimes

 

Hope this is some help.

 

Che

 

Absolutely true. The starting point with deductions and salary overpayments is that the payment has already been made, so the deduction will leave the employee in the same position ie having earned above the NMW. An employer can, in theory at least, leave an employee with zero wages for the month by deduction 100% of a previous overpayment, hence why there should be some dialogue beforehand to try and prevent that!

[caro]

Doesn't the fact that it was the employers error make any difference?

[elche]

Doesn't the fact that it was the employers error make any difference?

 

Now that is the 64 dollar question and something I'm really not sure about. Thus, I limited my comments to the NMW part.

 

Che didn't want to look stoooopid . I reckon you might need a good source of info like Harveys or Lexis to get a definitive answer ..... but I'm not 100% sure on this part of this problem....hmmmm

[caro]

Fair enough Che!

 

Hi Thanks for the responses.

 

The payment cleared my unauthorised overdraft, but still left me overdrawn by £100 or so, although no bank penalties/charges apply unless I exceed £250 so this isn't too bad really. I've since stopped using the account and they've not contacted me for a while.

 

My employer isn't being very specific over this, simply stating that it needs to be "recovered" ASAP.

 

I was considering writing a grievance against the Finance Dept for the distress caused by this, and then suggesting that I repay a nominal amount each week, so that it is paid off over the course of 1 year as my financial situation is delicate.

 

Would I be able to charge my employers, or seek a reduction in amount owed, for the additional administrative work I have done, like pleading with Halifax to return the funds etc?

 

Incidentally, if they insist on taking more than I can afford per week/pay period etc, can I refuse to pay and seek a court order which will take into account my circumstances and ability to pay?

 

I think if it was me I'd just try and negotiate this amicably to begin with and see how you get on. Make them an offer that you can afford, and if they accept it then great. At least it's saving interest building up on the unauthorised OD, although if you have more urgent or priority debts that's not ideal.

 

If that doesn't work out then consider taking it higher and perhaps, if necessary, taking out a grievance.

[firstclassx]

hi again guys,

 

Update to this, I offered to pay £30 a week over a period of 1 year to cover the mis-payment, which would cover the entire amount. This works out £120 per 4 weekly pay cycle.

 

They refused this and have stated they will deduct £1500 from me in next weeks pay, which leads me with nothing at all for next month.

 

Planning to submit a grievance, but I guess there's nothing I can do to stop them making the deduction?

 

I'm also thinking about going down the Data Protection Act route, for them failing to keep accurate information on me, and retaining expired information and using it without authority.

[CrappoMan]

I would argue that you haven't been overpaid.

 

A scenario for you:

If the employer had made a one digit mistake with the account number and paid the salary into a random suspended account, which also happened to be overdrawn, and the recipient bank had refused to refund the money, would the employer hold YOU liable for the money ?

 

This is what has happened to you, the only difference is the random account is in your name.

 

The employer can't state that you have had the benefit of the money by repaying a debt of yours, they don't know what your intentions are towards that debt and it's none of their business.

 

The employer made a mistake. They have already paid into the new account so the old account details should not have been retained. Threaten them with the DPA and ICO.

 

They will have to ask the bank to refund the money. If the bank think it was your salary they won't refund it. The employer should have said it was a different employees salary paid into the wrong account.

[firstclassx]

I would argue that you haven't been overpaid.

 

A scenario for you:

If the employer had made a one digit mistake with the account number and paid the salary into a random suspended account, which also happened to be overdrawn, and the recipient bank had refused to refund the money, would the employer hold YOU liable for the money ?

 

This is what has happened to you, the only difference is the random account is in your name.

 

The employer can't state that you have had the benefit of the money by repaying a debt of yours, they don't know what your intentions are towards that debt and it's none of their business.

 

The employer made a mistake. They have already paid into the new account so the old account details should not have been retained. Threaten them with the DPA and ICO.

 

They will have to ask the bank to refund the money. If the bank think it was your salary they won't refund it. The employer should have said it was a different employees salary paid into the wrong account.

 

I have written to my employer and reminded them that as per Section 13(1), 13(2) of the Data Protection Act 1998, compensation can be awarded for failure to comply with certain requirements of the Data Protection Act, in cases where it has caused distress or damage.

 

It has caused me stress and damage IMO.

 

I am prepared to pay £30 pw over a 1 year period. If they choose to deduct the full amount next week, I'll have to take action.