over payment at work

curious george

Hi,
does anyone know the legal situation with regard to being over-paid at work. I began work in october and was told how much i would be paid. I have worked since then and was paid exactly the amount i was told i would be. However i got a letter from payroll yesterday to say that they made a mistake putting me on the salary i was on and want to move me down a grade and also want me to repay what they have calculated I was overpaid in the last 4 months. Whatever about moving me down a grade I am very annoyed that I may be expected to pay for their mistake.
any advice appreciated.

dodgey69

Did you sign contracts when your started work there? any of them got your salary on it? if so then i can't see you having a problem.

kmick

You need to look at your contract. If it says how much you are to be paid and you and the company have signed up to that then they cant take any money back. However if you agreed to be paid 100 a week and they paid you 110 then you have to pay it back. Offer to pay them back over 12 months so the pain will be less. They have to say yes as it was their mistake.

curious george

thanks a million for replies. The situation was, i had worked for this organisation for 4 years then took a years leave of absence and. So my signed contract was from then with a starting salary on that date on the contract. I had promotion and salary scale increments during that 4 years so the salary as listed on the written contract no longer applied. Just started back in october and was told i was going to be paid a certain amount. I did not get that in writting-only was verbally told. The company are not disputing that they told me i would be paid that amount and say it was their mistake. I got paid that exact amount so it wasn't a case of me knowingly being paid too much and keeping quiet.

dermot_sheehan

If you were told you would be paid X for doing Y, and you agreed and did Y, a valid contract has been formed and you are entitled to be paid X. A contract entered into where there has been unilateral mistake is valid, unless the other party was aware of this mistake when entering the contract and took advantage of it (see Hartog v. Colin & Shields http://en.wikipedia.org/wiki/Hartog_v._Colin_and_Shields )

This appears to be the case in this situation if you knew you were not supposed to be paid X but kept quiet about it.

curious george

thanks again for reply. No this was not the case. I was told i was going to be paid x, was paid x and now work claim they made a mistake and i shouldn't have been paid x but should have been paid y (less than x). They now have put me down to rate Y and want me to pay back the diference over the last 4 months. An important point is i had no idea that i should not have been paid x and really could not have been expected to know that i should not have been paid x.

Adey2002

From what gab said (unilateral mistake) it sounds like you may be able to refuse the pay cut and certainly refuse to repay the supposed overpayment.

I'd go seek legal advice if I were you.

Jo King

Legally the position is that there may be an estoppel in favour of an employee who has been overpaid. In situations where the employee has been given money to treat as his own and does so, the courts have held that the employer cannot in good conscience demand repayment, and therefore the courts have in many cases refused to order the return of the money. Every case turns on its own facts and an employee needs to think of his own situation. Sometimes a threat to go to a rights officer may be enough for the payroll people to back off. Sometimes the victory is pyrrhic as the management retaliate in some way.

curious george

Thanks again for replies. The situation now is that I wrote a formal letter to the HR manager to say I wanted to seek some independent advice on the matter before considering any potential repayment. As Jo king said this was enough for them to re-consider their position also. This morning I got a letter proposing that they now would not be seeking repayment of any money but i would be put on the lower pay scale until august 1st when i would be due an increase anyway. They want an acceptance of this proposal in writing ASAP. I think I will accept this. As Adey 2002 says I may be able to refuse the pay cut (not sure if i legally could or not) but its only temporary and i would tend to agree with Jo King. I still have to work here and there is no point in pushing it too far at a potential cost to myself further down the line.