Overpayment of wages problem

[Oski]

Hi all - New to the forum so sorry if wrong forum.

So i'd like to know where I stand and what can be done.

 

I'd like to beforehand state:

- I informed them of the overpayment initially then they allowed it to happen for the second month in a row even after telling them.

- I want to pay them back however:

 

Ok so for the past 2 months i've been overpaid equating to an overpayment total of roughly £1400, I told them when they overpaid me the first time as soon as I received my payslip and they said "we'll sort it out, you need to do nothing more" I kept chasing them (the managers) up about it and asked for a direct HR email to be told I wasn't allowed it as they the managers had to deal with it, come the second pay day I got overpaid again.

 

They finally got back to me the other day with the total stating it was roughly £1400 GROSS. Which can be paid back in installments which is fine..

 

I still annoyed as I didn't ask for this extra money I already told them of this problem straight away and now I owe money to my workplace when I am already struggling financially.

However I feel this figure is wrong, I feel they have taken my bonuses into this recoup money and also does gross mean the tax and NI money taken is included in the figure?

 

I have requested a breakdown but its gonna be emailed again..

 

Can I request a written/printed or some kind of official breakdown or do I have to go with the figure given that was emailed to me?

 

HR and my managers are being so shady that its annoying and no one wants to take accountability, I just don't know where I stand..

 

Thanks in advance..

Edited October 14, 2012 by Oski

[altobelli]

If the figures they have provided don't tally with what you believe is the amount of overpayment, HR should be able to provide you with a breakdown. You don't have to go with the figure given initially, you're entitled to check it (and given that your employer doesn't appear to know what they're doing, I would check it very carefully), but if it turns out that the figure they have provided is correct then this is the amount you would be required to repay.

[Emmzzi]

The tax tends to work out as if you get less next month there's less tax to pay - so as long as it all happens this tax year, no problem.

 

I'm confused abotu why you are paying in installments - you saw the overpayment as soon as it happened so would have put the money aside. surely better to do a lump sum and get it over with?

 

Yet it is your managers who are being shady?

[Oski]

The tax tends to work out as if you get less next month there's less tax to pay - so as long as it all happens this tax year, no problem.

 

I'm confused abotu why you are paying in installments - you saw the overpayment as soon as it happened so would have put the money aside. surely better to do a lump sum and get it over with?

 

Yet it is your managers who are being shady?

 

Installments is because I personally don't think I owe them 1.4K Gross, the first overpayment I saw I told my manager, he said no that's normal if anything you've been underpaid so I was told that I was free to spend it, and as I did stupid overtime and thought it totted up but apparently not. I genuinely thought it was right thats why I have queried the recoup money figure.

 

The second overpayment I have aside, but thats only £400 they overpaid me the second time.

 

I would love to do the whole £1.4K in one sum but I am a student who works 20 hours a week, not a full time working professional, I just moved into my own place and I am already struggling financially as the SLC are dropping my loan super late due to them messing up, which means all my money minus the £400 put aside has gone towards my house i/e deposit which was £800 odd, first month of rent and bills, i'm already in my overdraft at the moment which is a rare because I always have that extra bit of money always available for "what if" moments.

 

My managers are being shady in the respect that there is a lack of clarity on the whole situation also because its taken them so long (over a month) to acknowledge what has happened and to get me a figure.

 

I hope this provides you with a further understanding, thanks.

[Oski]

If the figures they have provided don't tally with what you believe is the amount of overpayment, HR should be able to provide you with a breakdown. You don't have to go with the figure given initially, you're entitled to check it (and given that your employer doesn't appear to know what they're doing, I would check it very carefully), but if it turns out that the figure they have provided is correct then this is the amount you would be required to repay.

 

Yeah thats fine, i'm willing to pay the amount providing its broken down and justified.

 

Thanks for the help.

[Emmzzi]

I would love to do the whole £1.4K in one sum but I am a student who works 20 hours a week, not a full time working professional, I just moved into my own place and I am already struggling financially as the SLC are dropping my loan super late due to them messing up, which means all my money minus the £400 put aside has gone towards my house i/e deposit which was £800 odd, first month of rent and bills, i'm already in my overdraft at the moment which is a rare because I always have that extra bit of money always available for "what if" moments.

 

Absolutly none of that is your employers problem. You knew you could not keep the money; you spent it. I would say your employers are being understanding and more than reasonable. Not as competent as would be ideal; but you should be aware other employers would take a harder line.

[Oski]

Absolutly none of that is your employers problem. You knew you could not keep the money; you spent it. I would say your employers are being understanding and more than reasonable. Not as competent as would be ideal; but you should be aware other employers would take a harder line.

 

Where did I state that it was my employers fault? I said they were shady. Did you not read the part where I said my manager said I was free the spend the first part as they thought it was correct initially? Clearly not.

 

I appreciate the fact that you give advice, but not if your gonna be like this. I accept the problem, I wanted to know where I stood when it came to the figure given, someone else politely replied.

 

Please refrain from replying to my post if your just gonna point the fingers because as I stated in the original post and I quote "I want to pay them back", I came here looking for some answers not the whole you messed up mentality as I already have part of the money saved aside. I'm asking for advice not judgement. Chill.

 

 

[Emmzzi]

Actually, you said you wanted to know where you stand. I'm advising that you stand with a more than reasonable, if slightly disorganised, employer in front of you. You stand having spent money which doesn't belong to you that, because you made them aware you know it was an overpayment at day one, they can reasonabley ask for in a lump sum. (If you were unaware the legal position is different.)

 

This is good to know as it stops you going in all guns blazing as you aware of the hardest line they can take. So polite, not demanding, is the way to go.

 

I'm perfectly "chilled" thank you!

[Oski]

Actually, you said you wanted to know where you stand. I'm advising that you stand with a more than reasonable, if slightly disorganised, employer in front of you. You stand having spent money which doesn't belong to you that, because you made them aware you know it was an overpayment at day one, they can reasonabley ask for in a lump sum. (If you were unaware the legal position is different.)

 

This is good to know as it stops you going in all guns blazing as you aware of the hardest line they can take. So polite, not demanding, is the way to go.

 

I'm perfectly "chilled" thank you!

 

I personally felt that your previous reply was rather judgmental, which is what lead to my previous reply, before you respond I am entitled to my opinion.

 

As soon as I get my finances in order I will be willing to pay them the bulk off, but at the current moment minus the £400 saved its not a viable option other than installments out of wages received.

 

I appreciate the information in the above quote, I am having a meeting with my manager today so will hopefully get this sorted out.

 

Thankyou.

Edited October 14, 2012 by Oski

[altobelli]

I don't think they can reasonably demand repayment on a lump sum basis, I think in the circumstances repayment by instalments would be fairer. In your favour you have the fact that you told them about the overpayment and they incorrectly advised you that, if anything, you had been underpaid. The £1,400 overpayment is likely not insubstantial given your status as a part-time worker, it could be a significant percentage of your wages and lump-sum repayment will cause you hardship. The problem has been exacerbated as you were told to 'go ahead and spend' the money. On informing the company of the overpayment you were told it would be sorted out, but the following month you were again overpaid. As the overpayment took place over a period of more than one month, you have a stronger argument against paying it back on a lump-sum basis. If an employer insists on lump-sum repayment for wages which have been overpaid over a period of time and the repayment is a large amount which could cause you hardship to repay, they may be liable for breach of trust and confidence.

 

It is best to try and negotiate terms for repayment with them. They are legally entitled to deduct the repayment from your wages (recovery of overpayments is not an unauthorised deduction from wages) provided your remaining wages don't fall below the minimum wage. If they do this on a lump-sum basis it is then for you to go to court and challenge the decision as unreasonable, so best to avoid that if possible.

[Sillywizard]

It is best to try and negotiate terms for repayment with them. They are legally entitled to deduct the repayment from your wages (recovery of overpayments is not an unauthorised deduction from wages) provided your remaining wages don't fall below the minimum wage. If they do this on a lump-sum basis it is then for you to go to court and challenge the decision as unreasonable, so best to avoid that if possible.

 

I wish that was true but unless the employment is retail, in which case some very limited protection may apply, then the employer can take back overpayments in any way they choose. In addition, genuinely shady employers ( I know of at least one restaurant chain and several bookmakers/petrol station chains) are legally entitled to take money from their employees for stock and cash 'shortages' and, under English law, the effect that this has on minimum wage is immaterial.

 

My reading of this is that the employers have converted the net overpayment into a gross in order to do the original poster a favour for her honesty but that this has backfired a little. Good intentions pave the road, so they say..

[Emmzzi]

legal stuff here

 

http://www.direct.gov.uk/en/Employment/Employees/Pay/DG_175878

 

http://www.xperthr.co.uk/faqs/topics/3,23/deductions-from-wages.aspx?articleid=57150#57150

 

this is the bit that does NOT apply

 

The position can become more complex if the employer has made overpayments over a long period of time, perhaps due to a payroll error, or where the overpayment was made some months ago and has only recently come to light. The employee may have a defence to a claim for repayment on the basis that he or she was led to believe that there was an entitlement to the money and that, in good faith, he or she has "changed [his or her] position" in reliance on the money.

[altobelli]

It is true Sillywizard. If the OP had left the employment of the company owing the overpaid amount, and the company went to court to claim the money back, then given the OP's circumstances and the underlying factors (overpayment happened over more than one month, they were told they hadn't been overpaid, and they were told it would all be sorted when he raised the issue after the first month), if the OP were to present monthly income and expenditure and demonstrate that lump-sum repayment would cause hardship, it is highly unlikely that any judge would order a lump-sum repayment, and an installment plan would almost certainly result. The difference where the OP is still employed is that the company can take back the overpayments. However, this must be reasonable. If it is not, and it causes the OP hardship, they can have a claim under breach of trust and confidence. Eventual outcome is likely to be the same, but the onus would be on the OP to go to court. To avoid this its best to negotiate a phased repayment, most employers will agree to this if presented with the figures and circumstances in the case outlined here. Looking purely at deductions for previous overpayment, the deductions can't take the remaining amount below the minimum wage.

 

The stock and cash deductions you refer to apply to retail workers and may not be relevant to this case, the employee must be told in advance that the deduction will happen, the employer can't just take the money, and provision needs to either be included in the worker's contract or the employer must have written consent from the worker, and deductions are limited to 10% of gross salary each payday.

[altobelli]

Thanks Emmzzi, yes the overpayment is certainly recoverable, its just the timeframe which is in question. The following article gives some good guidance on this, especially the last paragraph, bearing in mind overpayment happened twice and OP was given incorrect advice:

 

http://www.lemon-co.co.uk/article_overpayments.php

[Old Cogger]

Just as has been stated in courts when somebody had money credited into their Bank account which they reasonably new was not theres, then they should of reported the fact to the Bank and NOT spent the monies, in the end they ended paying County Court fees as well in the long run, so as you would reasonably know your wage per week/.month then above could be the answer you would get, bit as the situation was reported by you the employer (after you spent it?) if not you would repay them the said amount?

 

If they agree that you can pay instalements then = you are lucky they are taking that attitude. Hope it gets sorted amicably.

[Sillywizard]

Perhaps I wasn't clear - the bit which isn't true in my quoted passage relates to your correlation of deductions with minimum wage. You'll find loads of references on the internet which will outline that the law as applied to wage deductions is found in the Employment Rights Act 1996, ss13-27, and like many others (including a surprising amount of solicitors) might infer from the reference to 'retail workers' that the application is confined to this sector. I assure you that this isn't the case.

 

I won't bore you with the case law (unless you'd like it, of course) but in 1986 the House of Lords elected to interpret the aged Truck Acts of 1896 to uphold the appeal of a petrol shop cashier who had lost 75% of weekly wages to motorists who drove off without paying. This being during the Thatcher years, parliament produced in response the Wages Act 1986 which restored the right of business owners to insure themselves against loss in this way and the Wages Act became the Employment Rights Act ss 13-27 which is the cornerstone of wage deduction law today.

 

It's been challenged since, naturally, in a variety of business models but Mark Freedland's academic opinion of employment as purely contractual has been authorised by subsequent HL decisions , most notably in response to an application of Douglas Brodie that the obvious inequity of the law as it stands would be capable of challenge under the Unfair Contract Terms Act, since an employee is typically contracting with someone who is acting in the course of their business. While that argument has been rejected in England, it's at least theoretically available in Scotland since a different section of UCTA applies.

 

In relation to the facts of the OP as I understand them, the current legislation specifically permits the whole of the last wage, including holiday pay accrued, to be withheld against any sums legitimately owed to the company and the circumstances in which a debt arises post employment don't seem to arise here. Any county court judgement will take into account the ability of the defendant to pay, including the manner in which it's paid, but that area didn't appear to be relevant to the circumstances described in the original question.

[altobelli]

Thanks for your reply Sillywizard, but it is true that generally as I say deductions can't take the remaining amount below the minimum wage, and that most likely this would apply in the OP's case. The deductions you refer to apply only to the retail sector, this is defined in the ERA as:

 

(a)the carrying out by the worker of retail transactions directly with members of the public or with fellow workers or other individuals in their personal capacities, or

 

(b)the collection by the worker of amounts payable in connection with retail transactions carried out by other persons directly with members of the public or with fellow workers or other individuals in their personal capacities.

 

Retail transactions are further defined as the sale or supply of goods or services, including financial services. As per my previous post, there are various pre-conditions which must exist before a deduction can be made, an employer can't just come and help themselves to the outstanding amount. Importantly, the deduction is limited to 10% of gross salary per payday, unless it is the last payday of the worker. But this retail provision would not seem to be relevant to the OP, theirs is a case of overpayment of wages, there is no indication that they work in retail, and cash or stock shortages are not an issue here. Nor have they been asked to pay anything for cash or stock shortages. Even if they were, the maximum deduction in this case would be 10% of his gross monthly wage. To deduct 75% of a worker's wages to make up a cash shortage, unless it was from a final payslip, would not be lawful!

 

My understanding of the common law relating to employment is that the underlying premise is one of a 'master-servant' relationship, this is why various pieces of statutory legislation have been introduced, to clarify and bolster the existing common law.

 

The OP's case is one of overpayment of wages, there is no suggestion that they are being asked to make up a cash or stock shortfall, or that they even work in retail. There is no dispute that they have been overpaid, the question is how the overpayment will be recovered. Legislation certainly does not specifically allow the whole of the wage to be deducted by an employer, for a start the deduction can't take the remaining amount below minimum wage. The timeframe of repayment must be reasonable in the circumstances. Here you have a case where the OP raised the issue of overpayment, was told that the pay was correct and they could spend the money and that it would be sorted in the next payroll. But the overpayment occured a second time (this is an important point). The OP is a student working 20 hours per week. It is very relevant to look at how a judge might view this if the employer was forced to go to court for the outstanding amoung - as you say, it would be based on ability to pay (and also underlying circumstances) and would almost certainly result in a phased repayement. The reason that this is relevant is because it is exactly how it would be looked at by a judge should the company make an unathorised deduction and the OP have to take the matter to court. The only difference is that the onus would be on the OP to take the matter to court should an unauthorised deduction occur.

 

I think there may be some confusion with you in that as wages are normally paid in arrears, an employer can physically deduct what they like from it, ignoring the minimum wage constraints. This is not the same though, as being specifically permitted by legisaltion to do so. Generally, any deduction which takes the remaining amount below minimum wage is unlawful, and any deduction for overpayment of wages, etc., must be reasonable in the circumstances, if the employer makes a deduction knowing it will cause hardship to the employee they will be open to a claim for breach of trust and confidence. An employer can physically not process the payroll at all, but this is of course not permitted by statute.

 

In the OP's case, the best approach would be for both parties to negotiate a phased repayment taking into account the underlying circumstances and the OP's ability to repay. Luck would have nothing to do with whether the employer agrees to this or insists on a lump sum repayment, it is legally down to the employer to look for repayment on a reasonable basis. The OP can give a variety of reasons as to why it would be reasonable to repay in installments and why to repay in a lump sum would cause hardship. Can the employer in this case argue that insisting on lump-sum repayment is reasonable? I don't think so. Most reasonable employers wouldn't even try. But it is better for the OP to agree a repayment plan with the employer rather than see the whole overpayment unreasonably deducted and then have to go to court to obtain satisfaction.

[Sillywizard]

Many thanks for that Altobelli - I regret that I'm still not being clear in my response.

 

My specific question to you would be this - is there any legislation which supports your statement that deductions can't take wages below the minimum wage?

[altobelli]

No problem Sillywizard.

 

In answer to your question, yes, there is. The National Minimum Wage Act of 1998 and associated case law specify which deductions can or can't be made in relation to the NMW. Generally speaking, deductions which can be made to take pay below the NMW are limited, and the burden of proof is I believe on an employer to show that any deduction is lawful. With regards to deductions for cash or stock shortages for retail staff, this is capped at 10% of payday wages (except for final month's pay) under section 18.1 of the 1996 Employment Rights Act, and that is why the case you refer to, where the filling station worker lost 75% of their weekly wages, would no longer be legal. The following link, previously posted by Emmzzi, also gives details on this matter:

 

http://www.direct.gov.uk/en/Employment/Employees/Pay/DG_175878

 

Under the section 'Rules for making deductions from your pay', the following is stated:

 

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.

 

Please note that in some cases a deduction to correct an earlier overpayment of wages may be allowed even if it takes wages below NMW, but I would not advise an employer making such a deduction in these circumstances, particularly without giving advance notice and gaining the employee's consent. Legislation limits deductions, i.e. there are far more deductions which would be unlawful with regards to NMW than there are which are lawful. As mentioned, it would be for the employer to prove that a deduction was lawful. Even aside from NMW considerations, the deduction of wages from an employee should be fair and reasonable, otherwise the employer is open to breach of trust and confidence claims. A deduction which takes wages below the NMW and exposes an employee to hardship could be difficult for an employer to defend, particularly if they are unable to give a satisfactory reason as to why they couldn't agree to a phased correction of the overpayment.