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Members Newsletter April 2019

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Accidentally overpaying an employee can lead to a costly mistake

The law protects all workers from unauthorised deductions being taken from their pay.

To lawfully make deductions from wages or to receive payments from a worker, the deduction or payment must be:

a) Required or authorised by law. For example, income tax, National Insurance, a court order.

b) Authorised by an express clause contained within the worker’s contract, provided the worker has been given a written copy of the relevant terms or a written explanation of them before the deduction is made.

c) Agreed with the worker and with written consent provided by them before the deduction is made.

It is inevitable that mistakes are sometimes made and workers are overpaid. Seeking recovery of such overpayment can be relatively straightforward if the individual is still employed, however where they have left the business matters can become problematic.

If a company wishes to recover an overpayment from a former worker, it can bring a claim in the civil courts for restitution. In order to be successful, there are three requirements:-

1. The individual has been enriched, or has received a benefit;

2. The enrichment of the individual is unjust; and

3. The enrichment of the individual was at the expense of the company.

However, it is important to recognise and appreciate that a claim for restitution can be defended by an individual by arguing that he or she has changed his or her position (i.e. by spending the money) as a result of the overpayment. Where this is argued, the Courts will look at whether requiring the individual to repay back the overpayment would be unjust for the individual concerned. A number of factors are considered such as the amount of money being sought and the means of the individual.

However, if it can be established that the individual believed that they had been overpaid and a simple enquiry could be made by then but they chose not to, this makes it much more difficult for them to be able to run a change of position defence.

Should you require any further information or need any advice on the recovery of sums whether that be from current or former workers, please do not hesitate to contact us on 0161 837 6844 or via email [email protected]

Carley Dhand, Employment Specialist at Linder Myers Solicitors advises:-

“Where an employee is invited to an investigation meeting to discuss allegations against them how much detail do you have to give? For example, could you just state to answer allegations of ‘misconduct’?”

There is nothing in legislation or the ACAS Code of Practice on conducting workplace investigations which confirms the level of detail that should be provided to an employee in advance of an investigation meeting. However, it is important to check your own disciplinary policy and procedure as this may stipulate how much detail (if any) you ought to give.

It is noteworthy to add that investigation meetings are purely a fact-finding exercise. They are not disciplinary hearings (where you are obliged to provide full details of the allegation(s) in question).

It is however always important to bear in mind the implied term of trust and confidence which is incorporated into every employment contract. In particular, care needs to be taken not to breach the obligation of trust and confidence which could sufficiently undermine the employer/employee relationship and entitle the employee to resign and claim constructive (unfair) dismissal.

If you require further advice on this please do not hesitate to contact us on 0161 837 6844, or email us on [email protected]

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