Overpaid by employer

Jeebus H Christ

Hi all, I was wondering if anyone knew whether you are legally obliged to repay an employer that overpaid you? I continued to receive a salary for a couple of months last year after my contract ended with an employer. They haven't asked for it back (yet!) but the info the tax office hold for me isn't correct due to my employers' error, so just wondering what the story was.

MIN2511

Congratulations!!! I don't think you are obliged to return the money, their mistake and since you don't work with them anymore-their loss!
Not sure... but you can confirm it-i don't think there are any rules on being over paid



searching citizens.ie at the moment

mikemac

You are certainly are required to give it back though I can’t quote the exact legal part.
Maybe the Payment of Wages Act 1991? I think they'll try to screw you for fraud and now you know and did nothing.
Put it this way, if your employer didn’t pay you for months you’d threatening legal action or walked out long ago.
So yes, they can demand the money back but not all at once. If you want to be realy cheeky offer to pay them back at a low rate every week.;)

You say a couple of months, this could be thousands or maybe tens of thousands. I can see the payroll clerk getting sacked over this
They might not find it until an annual audit so that could be months away.

If I were you I’d say nothing but that’s just me, not advising it

Edit: Tell them you thought it was a bonus if they demand it back. It might work!

helimachoptor

Op I have been over paid a few times by my company. Sometimes by substantial amounts. In november they overpaid me by close to €1000 after tax. It is only me in my company who it happens to. I say it my HR rep and she usually works out how much I have to pay back and I write a cheque. But I am insistent that if she hasnt asked me to pay it back by the time of my next pay day she will not be getting it. This has happened 3 times probably to a total of about 2000 euro so not a small amount.

As i said i am not sure why this keeps happening to me but tbh its irritating.

As you have left the company I wouldnt worry about it.
I think if i left my company they would still continue to pay me!

Jeebus H Christ

The funniest thing is that they actually noticed their error initially, then proceeded to double it (literally!) the following month! I haven't heard back from them since despite asking for an updated P45, which is not accurate either.

Jeebus H Christ

Micmclo, exactly what I was thinking! I actually thought the first overpayment was holiday pay I'd been due, obviously wasn't after it happened again! I plan on playing dumb if they ask for it back, but it's long spent so I don't want to give it back if I'm not obliged (legally, whatever about morally!) to.

MIN2511

They noticed their error? Is this a conspiracy or is this human error?
Are you still receiving payments?

Tom Dunne

MIN2511 wrote: »

Congratulations!!! I don't think you are obliged to return the money, their mistake and since you don't work with them anymore-their loss!

Don't be silly, of course he has to pay it back.

Jeebus H Christ

It's not a conspiracy, actually I'd say it's more utter incompetence than simple human error. I think they thought they resolved the error rather than compounding it. They're quite a big company with several thousand employees, and a regular staff turnover in the payroll department.

Slate

It is wholly illegal for your employer to make any deduction from your wages which is not either required by law or has been agreed by you.

So, income tax deductions and national insurance contributions can (and indeed must) be deducted from your wages before you are paid. These are statutory deductions. Deductions ordered by a court, such as maintenance payments or payments for a fine are also legitimate.

Where employers pay a hefty sum of money for training, many of them will require that the employee pay all or part of this sum back if they leave within a certain period of time. Some of these agreements will include a clause allowing the employer to deduct the sum from the final payment made to the employee.

Relatively few employers will include a clause within the employment contract that gives them permission to deduct overpayments but if such a clause is included within the contract then the employer is entitled to take back any overpayment by deducting it from your wages. (Though it could be argued that if the overpayment was their mistake and then the deduction left you short, the employer might be liable for ‘damages’ such as bank charges incurred, etc).

So, in most cases, employers are not allowed to take money directly from your wages. But can they demand that you give the money back?

Well, this is where common sense and the law part company and why it often pays to consult a lawyer before acting. Many people would think that the money belongs to the employer and the employee must return it but it’s just not that simple.

First it depends why the overpayment was made – was the overpayment made as a result of a ‘mistake in law’ or a ‘mistake in fact’?

A mistake in law is where the employer incorrectly interprets statutory regulations or legal instruments – no clearer? – well, suppose an employer had to decide whether a particular regulation applied to you, and suppose this regulation regarded whether or not a particular allowance applied to you – so the employer decides that the allowance does apply to you, makes the relevant payment to you, and then later finds out that they were wrong and you shouldn’t have had the money – that’s a mistake in law.

And a mistake in fact? You submit an overtime sheet that says you’ve done 2 hours overtime and someone enters the figure as 20. Simple errors of one kind or another. A mistake in fact.


Still keeping up? So, either the overpayment is a mistake in law or a mistake in fact. (Actually, even then it’s not so simple – an employer desperate to get money back might argue that an overpayment was one rather than the other – but this usually applies to really high earners or where large numbers of employees have been overpaid and it’s all gone to court). Why does it matter whether it’s one or the other?

This – if the overpayment is due to a mistake of law then tough – the employer can’t demand their money back. They can ask, and you might decide it is wise to give it back to keep your employer sweet, but they cannot demand you pay it, and if they took you to court they would lose (so long as your solicitor is up on this aspect of the law).

But, if it is a mistake in fact, then the employer may be entitled to demand the money back.

May? Why only ‘may’?

Ah, well, here’s another thing. Even if the overpayment was due to a mistake in fact the employer cannot recover the money if the following three conditions are met - if the employer has lead the employee to believe the money was theirs (one suspects that the provision of a wage slip including the amount would suffice); if the mistake was primarily not the fault of the employee (so you can’t mislead the employer); and if the employee has subsequently spent the money or used the money to change their lifestyle in some way (e.g. bought a car on HP).

It is not completely clear cut, however, and, if the sum is large enough and the employer is determined, they may take the matter to court and look for an order demanding that the money is returned. Generally the courts will seek to do what is just in the circumstances. In order to do this the courts will take into consideration the amount of the overpayment, the level of negligence and whether or not the recipient knew or should have known about the overpayment.

These then are the legalities surrounding the matter. In general it is very difficult for an employer to recover an overpayment but there are limits. Legalpulse had a query from one individual who was normally paid £500 per month by an employer – this month, however, they had been paid £50,000 and wanted to know if they could keep it!! It is hard to imagine any court accepting this individual had not realised that they had been overpaid – sorry, but the money had to go back!

______________________________________

Need something to impress your employer? Or even prompt your solicitor? Here’s the case law -

"Mistake of law" : the Court of Appeal in Holt v Markham 1923 1 KB 504.
"Mistake of fact" : County Council of Avon v Howlett (1983 IRLR 171).

dudara

Great post Slate and really interesting reading

Slate

got it from legal site - can't claim the credit

AARRRGH

In my experience dealing with lawyers (and I've dealt with a few!) they can be very creative when it comes to accusing you of breaking certain laws.

OP this is the question you need to ask yourself: when the solicitors letters arrive (and they will arrive), are you willing to risk going to court over this?

IMO cut your losses now. Tell them again about the mistake, and that you can't afford to pay it all back now, but you are willing to make a small monthly payment for X years.

jdivision

Are you sure it's not holiday pay you were owed?

Angus MacGyver

Ive read somewhere that if your employer does not come looking for it within a certain time frame then you can claim it as your own, but its something like 3 or 4 years i think.

I was overpaid close to 4k the week before Christmas but told politely to pay it back the next day. I didnt challenge it as i had only been in the job 2 months. what a christmas it could have been

Jeebus H Christ

Thanks for that Slate, a lot of interesting information there. From that I would say that the error was a mistake in fact, because my contract had ended but they continued to pay me...HR and payroll not communicating with each other I would guess. I also received payslips detailing each payment, but this is where it gets a little bizarre. When the error was initially noticed I got one phone call from HR (nothing subsequently), and the payslip for the following month showed a minus figure, i.e. the amount overpaid. BUT, I then received that exact amount in my bank account the next month....someone had failed to notice the minus symbol! I haven't heard from them since, but should they contact me they'll be looking for something in the region of €7k, which I do not have to give them. Although if I'm legally obliged to I guess I can pay them €1 a week for the next 134 years!

mikemac

Jeebus H Christ wrote: »

. Although if I'm legally obliged to I guess I can pay them €1 a week for the next 134 years!

Now you're talking!

Jeebus H Christ

Hey, far be it for me to go against the law of the state!

alanceltic

Jeebus H Christ wrote: »

Although if I'm legally obliged to I guess I can pay them €1 a week for the next 134 years!

Oh come on, now you are just being completely sarcastic, I mean the euro is going to be well out of date in 134 years time, we will be all using earth credits by then, get with the programme and stop being crazy :D:D

V interesting thread all the same, I was once overpaid by about £600 and my morals got the better of me .....NOT, does this make me a bad person, eh who cares lol

How Strange

I presume these over payments totally f*ck up your tax and net pay...

Regarding paying back €1 over 134 years or any such smart arsed action I would say what goes around comes around. Just give them back their money, tell them in writing to be more professional in future and get them to sort out your tax and net pay and issue a correct P45.

They can pursue you legally and no, it won't be paying €1 for years on end. A judge, if it goes to court, will make you pay it back in realistic amounts and they will take a dim view of you acting the fool or having spent the money.

BossArky

OP, are you sure it was an overpayment then?

Years ago I finished a job on a student placement overseas and was back in Uni at Christmas. I was down to my last £2 for a block of cheese and sliced pan, when in through the door comes a letter from the company I worked for over the summer sending on a few grand in tax which I was entitled to.

Another time I finished up a job and got over a years worth of overtime at once.

Zagorkagirl

Jeebus,

You should have informed your employer about the mistake immediately - this was paid to you in error and you are not entitled to keep it. An overpayment of wages does not come under the scope of the 'Payment of Wages Act 1991' but your employer is entitled to seek repayment of the overpaid amount.

He will probably contact you and request repayment (although you can repay it over a reasonable amount of time - not €1 per week!). If you don't agree to this, the employer will treat it as a bad debt and could pursue the matter through the courts.

These mistakes happen in any payroll office (or any other type of office for that matter). It is not 'unprofessional' or 'negligent' - the payroll clerk won't be sacked as suggested by another poster. He/she made a mistake and will want to rectify that mistake asap, so i wouldn't go spending that money!

Contact your ex-employer again and explain the situation (and be sure to get a new P45)

Z

Jeebus H Christ

Thanks for the responses, not quite what I was hoping to hear though! It was definitely an overpayment for those that asked, which as I said earlier my employer initially noticed but then proceeded to compound their error. I'm not in a position to pay it back (so yes it is long spent!), and frankly I'm in no rush to because I had a dole claim rejected in part because my employer took three months returning some essential forms to me. I'll wait for them to perform an audit (a distant distant audit hopefully!) and then we can come to an arrangement. I'll try and keep my offer of payment sarcasm free so as not to upset some sensitive posters!

Jeebus H Christ

Just an update for anyone interested, got this legal advice:
"As you have ceased employment, your previous employers would need to pursue a Civil Action against you if they wished to recoup the Overpaid Money. [SIZE=-0]
Generally, the law makes a distinction between what are termed 'errors of law' and 'errors of fact'. Errors of law are much less common than errors of fact and usually arise from the employer misinterpreting some legislation which then leads to an overpayment to the employee. In these circumstances, a court might hold that the overpayment is not recoverable because it would not be reasonable in the circumstances to order recovery where the error is the employer's. Much more common are errors of fact. In these cases, the courts will nearly always order recovery from the employee unless there are truly exceptional circumstances which lead to the overpayment. Common errors of fact would be, for example, where the employer mistakenly places the employee on a higher grade or increment than they should have been placed."


Pretty much the same info as was posted by Slate when I originally posted, so it looks like I'm legally obliged to pay it back. Notified my former employer, and find myself in the bizarre position of arguing with them that I owe more than they say (my bank account doesn't lie!). I did mention the salaries office were incompetent! But, I don't want to agree (well I do want to but I probably shouldn't!) to paying back the lesser amount as I may have to explain the discrepancy to the tax office later on.

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mountainyman

You deffo have to pay it back byt only a tenner a week or something lie that.

snellers

chances are you will be chased up for it ....but there is a possibility they won;t- if in your position and I didn;t want to come forward then I would open a high interest savings account and put the cash there.....are you in a financial position whereby you could afford to pay the cash back whenever they want? If not is it worth running the risk? Let the company run through their next years end of year accounts and if nothing arises chances it never will