Is overpaid wages after employment ended a debt?

kluged

Hi I left a job at the end of May and found out the other day that my previous employer has continued to pay my salary even though I don't work there anymore. The payroll is outsourced and handled by the local authority. They sent me my P45 etc at the end of May confirming they had processed me out of their system but for some reason did not stop the payments.

The usual process for recovering money resulting from a wages overpayment is to collect it from ongoing wages. However this won't apply as I no longer work there.

My understanding about the process for collecting an overpayment of wages for a former employee is that they would have to make a county court claim. This page - http://www.paypershop.com/faq/overpaid.html implies that I would not be found liable if I were to defend a such a claim as long as my employment contract did not specify a clause regarding the repayment of overpaid wages. I have checked my contract and it doesn't have such a clause.

However this page seems to refer to an employer attempting to collect an overpayment that occurred _during_ employment. I am wondering if the law would be different as mine results from a payment occurring after my employment had ended.

I would appreciate any advice you may be able to give. Please note that I am not nasty! I have already checked with my former employer and confirmed that it is the local authority who have to accept this loss, not them, as it was their error. Otherwise I'd just give the money back.

itsarichmansworld

I had a debt collector come after me for overpayment it was in my contract though

mountainofdebt

I think there is case law to say that if you spent money that you knew that wasn't yours then you haven't a leg to stand on, both in terms of paying it or over what length of time.

However, if you can argue that you didn't realise what had happened then I think you have a stronger case for coming to some agreement as to the length of time you can pay it back over.

The LA does not have to accept the loss....they are entitled to chase you for it and to be honest, you sound as if you know you are not entitled to keep this money but are asking if there are any legal ways of doing just that.

Whether they will or not depends on the amount and, I guess whether they can be bothered to.

kluged

Hi, thank you for your responses to far.

Mountainofdebt: Just to clarify - I know exactly what has happened in respect of the overpayment & so does the LA (After posting the message this morning I have received a letter from them requesting I get in touch to arrange repayment). I also haven't spent the money and would be able to pay it back all in one go if necessary.

You are also correct in your belief that what I am trying to do is find a way to avoid paying the money back. If I can determine that a county court would consider me not liable to consider the overpayment as a debt and pay it back then I would be looking at challenging the LA and refusing to pay it.

So to clarify my original question - what I am trying to determine is:
1) If an employer is attempting to recover overpaid wages for a former employee then would the employees liability to pay the money back depend on whether or not their contract specified a clause regarding repayment of overpaid wages. If there was no such clause (as in my case) then would a county court consider them not liable to pay the money back?

2) If so, would the same logic apply in the case of an employer continuing to pay wages after the employees employment had ended, as opposed to an employer attempting to recover an overpayment for a former employee that had arisen during the time they were working there?

I hope this clarifies my query.

mountainofdebt

kluged wrote: »

You are also correct in your belief that what I am trying to do is find a way to avoid paying the money back. If I can determine that a county court would consider me not liable to consider the overpayment as a debt and pay it back then I would be looking at challenging the LA and refusing to pay it.

I'm glad I wasn't be uncharitable in my assumption.

You don't have a right to that money, it was paid to you in error, you haven't spend it so what's the problem?

To answer your question bluntly, yes they do have the right to ask for it back so give it back to them.

I know specifically that my company has taken legal action against former employees who were overpaid and refused to give the money back and more importantly won.

kluged

Thanks again for your comments mountainofdebt. What I am really trying to ascertain is my legal obligation in this matter. I understand that I have been paid this money in error and that I can easily pay it back. From a moral and ethical point of view I probably should pay it back. But I would like to separate my moral obligation from my legal one.

I understand that your company may have taken legal action against former employees who refused to pay back the overpayment of their own wages and been successful. However, those cases may have been successful because the employment contracts specified a clause relating to the repayment of overpaid wages. If you read the link I placed into my initial post it would appear that liability to address overpayments as debts for former employees would depend on their contractual obligations. As I said in my previous posts this is what I am trying to clarify.

Many thanks for your comments.

tinkerbell84

It doesn't matter where the money came from - IT IS NOT YOURS.

Just give it back!

It's not rocket science!

Deep_In_Debt

I was overpaid by an employer once and I rang them immediately to tell them and sent them a cheque for the overpayment. I didn't want to be in a complicated situation, it wasn't my money so I sent it back to them. It was quite simple actually!

mountainofdebt

kluged wrote: »

But I would like to separate my moral obligation from my legal one.

Its when I hear comments like this I really know that this country is morally bankrupt.

skylight

This site is still called Money SAVING Expert. Here to save money and fight back - not to learn to rip people off or find the legal loopholes to keep what is not yours. If its that sort of advice you are after, then here is not the best place to be asking.

notanothergreyhair

I would suggest, although I do not KNOW, that this situation does not fall categorically under the laws of contract and that the laws of restitution would apply. I think that it is called 'unjust enrichment' - you have made a gain, albeit by a mistake, but fundamentally the money is not something you have earned.