Overpaid salary
Discussion
My son has been handed a bill for £3K from his employer (a school). Basically he dropped down to part time hours about 24 months ago, they cocked up the calculations on his new pay so although his wages dropped, it wasn't by the right amount.
24 months later an auditor has found it and they want their £3K back. They are insisting that they will take it back from his wages at such a rate he cannot afford to both fall to the new pay rate and repay at the rate they require simultaneously.
He knows he has to pay it back but as the school are insisting they get it back from wages ASAP and will take it whether he likes it or not it looks like he may have to give up his job. I suspect they will then pursue him through the small claims court.
Anybody any idea whether the smal claims will give him time to pay at a reasonable rate?
For some reason I thought there was a maximum time period for an employer to reclaim overpaid wages, but don't quote me on that. Sounds like you need some legal advice, maybe try citizens advice to point you in the right direction or do you have a legal policy that you could call e.g. as part of your house insurance?
The employer has the right to reclaim it, there is no time limit. However, there is a requirement to be reasonable in how they go about this. I would suggest that you attempt to agree an amount each month that would be manageable. If you can show that you instigated this and they were unreasonable in not accepting it or coming to an agreement then go and see an employment law specialist.
I've had a similar problem in the past. Yes they get the money back but they can't insist on getting it back at a rate which will cripple you financially.
I told them, after a quick chat with my union rep, that a rate of £10 a week was acceptable to me. This was deemed to be a good arrangement by my employer, after all it was their mistake!
Good luck.
I told them, after a quick chat with my union rep, that a rate of £10 a week was acceptable to me. This was deemed to be a good arrangement by my employer, after all it was their mistake!
Good luck.
Sir Bagalot said:
always find it strange that when people get overpaid they never ever notice.... but underpay them they know within 2 nanoseconds
True, but then when your HR or Finance dept turn round and say "We've recalculated your wages for your new hours, you'll now be paid at this new rate", you'd expect that to be the end of the matter.After all, my clients aren't expected to second guess or double check the service I provide to them, I'm paid to get it right the first time. I'd expect my HR or Finance dept to get it right first time too.
It does irk me when finances are cocked up and its somehow 'my' fault, despite it being someone else's job to get it right. "We've overpaid you for the past 18 months. Why did you not see this? We now want the money back."
I know that isn't how it works in the real world though, as I've found out in the past.
Edited by Brigand on Thursday 31st May 06:10
The correct procedure for this is to give notice of the error, then inform the employee of the date the correct rate will take effect (if it is a significant drop, then you should allow a reasonable period of notice, maybe up to 3 months notice), then agree a repayment plan that is affordable to the employee.
The employer cannot usually make deductions from salary without permission of the employee unless the contract specifically allows it. So the employee should make a reasonable offer for reimbursement in writing. If the company refuse this and take what they want, then the employee will lodge a grievance followed by a tribunal for unlawful deductions from salary.
Bear in mind that as long as the employee reasonably knew they were being overpaid, then they will have to pay the money back, it is just a matter of negotiating what is fair with regards to payments and timescales.
The employer cannot usually make deductions from salary without permission of the employee unless the contract specifically allows it. So the employee should make a reasonable offer for reimbursement in writing. If the company refuse this and take what they want, then the employee will lodge a grievance followed by a tribunal for unlawful deductions from salary.
Bear in mind that as long as the employee reasonably knew they were being overpaid, then they will have to pay the money back, it is just a matter of negotiating what is fair with regards to payments and timescales.
Cogcog said:
My son has been handed a bill for £3K from his employer (a school). Basically he dropped down to part time hours about 24 months ago, they cocked up the calculations on his new pay so although his wages dropped, it wasn't by the right amount.
24 months later an auditor has found it and they want their £3K back. They are insisting that they will take it back from his wages at such a rate he cannot afford to both fall to the new pay rate and repay at the rate they require simultaneously.
He knows he has to pay it back but as the school are insisting they get it back from wages ASAP and will take it whether he likes it or not it looks like he may have to give up his job. I suspect they will then pursue him through the small claims court.
Anybody any idea whether the smal claims will give him time to pay at a reasonable rate?
Part of my job is recovering salary overpayments for a public sector organisation. I'm not entirely familiar with the current state of funding for state schools, but I guess ultimately much of the cash comes from HM Treasury. While their guidelines say public sector organisations should pursue all overpayments, they have specific provision for hardship (A.4.11.19 of Annex 4.11 of the guidelines on managing public money). Linky:24 months later an auditor has found it and they want their £3K back. They are insisting that they will take it back from his wages at such a rate he cannot afford to both fall to the new pay rate and repay at the rate they require simultaneously.
He knows he has to pay it back but as the school are insisting they get it back from wages ASAP and will take it whether he likes it or not it looks like he may have to give up his job. I suspect they will then pursue him through the small claims court.
Anybody any idea whether the smal claims will give him time to pay at a reasonable rate?
http://www.hm-treasury.gov.uk/d/mpm_annex4.11.pdf
The annex also gives some good background on the legal position, including legal defences against recovery.
Putting someone in such severe hardship that they can't afford to work for you is not only bloody stupid as replacing them would likely to cost more than the £3K they're trying to recover, but it would also leave the employer wide open for a constructive dismissal claim.
I suggest they write to the payroll department and explain that they accept the overpayment but are unable to afford the repayments suggested. Make clear that they acted in good faith and did not recognise they were being overpaid. Provide supporting information on their financial position - we have an income and expenditure form we ask people to fill out if they claim hardship, but not everywhere is big enough to have processes like that - but it's not hard to come up with a list of income and outgoings. Provide supporting documentation (bank statements, mortgage details, bills etc.). If they can't afford to pay anything then request that they write it off under hardship. If they can afford to pay a little then make a reasonable offer. Repayment over the same 24 month period as the overpayment occurred would be an equitable offer if that's affordable for them.
If they still don't accept the proposed terms inform them that that they would be unable to afford to work for them any more as a direct result of their error and their chosen recovery terms and would have no option but to seek other employment and pursue a claim for constructive dismissal.
Google "Keenan v Barclays Bank". That case demonstrates it's almost impossible for an employer to recover overpaid salary.
What's more, this case demonstrates that if you are overpaid for a long period and get used to that standard of living, it can be difficult for your emloyer to drop your salary dowen to the correct level. After all, you might have taken out a mortgage based on your income, not knowing it was wrong.
What's more, this case demonstrates that if you are overpaid for a long period and get used to that standard of living, it can be difficult for your emloyer to drop your salary dowen to the correct level. After all, you might have taken out a mortgage based on your income, not knowing it was wrong.
Cogcog said:
Looks like the school have backed off and agreed not to try and reciover the money, but all this advice was really useful, especially making his case clear that he was only leaving because of their recovery method. I think they saw the error of their ways. Many thanks.
Just out of interest, what does his contract say regarding salary? If it was put in there when his hours changed and both parties agreed to it in writing, it's a whole other ball game...Keenan was an ET decision which means that it has no value n setting a precedent, it also was a specific set of facts. Essentially Barclays sent her a letter with the wrong salary and missed lots of opportunities to spot the problem. Lots of overpayments aren't like that so people should be very careful of reading too much into that one case.
Sir Bagalot said:
always find it strange that when people get overpaid they never ever notice.... but underpay them they know within 2 nanoseconds
I must be the exception that proves the rule. I went to get a new mortgage last year after a payrise meant I could finally buy the place I wanted in Clapham. Took my payslips in to the mortgage broker who asked me if I realised I had been paid £x a month less than I claimed I earned. A quick check with HR and a grovelling apology later, I had a nice cheque with backdated wages and a bit extra on the payslip each month.Xerstead said:
TwigtheWonderkid said:
Google "Keenan v Barclays Bank". That case demonstrates it's almost impossible for an employer to recover overpaid salary.
That's the case I was thinking of, but you beat me to it.How much do they want to stay on the higher rate?
This helped them see the folly of their proposed clawback.
That's the way to use it imho.
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