Question of salary overpayment and doctrine of estoppel

Cardinal-Red

Hi all

Due to an error at my organisation's HR function, it has just come to light that they have been overpaying me by around £200 a month since January 2008.

I won't go into specifics here as it's not relevant really, but I am making an application of estoppel to apply (based on Avon County Council v Howlett (1983)) to prevent them from recovering this overpayment.

My question is: if this application were successful either inside HR itself or at a tribunal, what is the effect of the decision... is it that the overpayments are written off, but my future salary is reduced to what it should have been since January (eg from now on I'll not get the overpayment but the historical payments will be written off); or will the overpayments become my actual salary from now on (i.e. they are estopped not only from recovering past overpayments, but also compelled to continue to pay me at that rate.)

I am pretty sure it's the 1st option (which seems fairest) but the wording of some of the cases and abstracts suggest the 2nd option. By arguing a change of position (and mine will be a new lease taken out in May 2009, and my partner accepting a lower paid job around the same time, based on budgets set around the higher salary) and therefore a breach of equity to demand the money back, because both of these changes of position are long term, does it not apply that the higher salary shall remain payable?

I am asking not out of desire to argue this 2nd point, but to word my response to them correctly.

Thanks for any replies.

Cardinal-Red

Sorry to BUMP my own thread but just wanted to make sure it was around for the evening crew who come on here...

iamana1ias

Cardinal-Red wrote: »

Hi all

Due to an error at my organisation's HR function, it has just come to light that they have been overpaying me by around £200 a month since January 2008.

I won't go into specifics here as it's not relevant really, but I am making an application of estoppel to apply (based on Avon County Council v Howlett (1983)) to prevent them from recovering this overpayment.

My question is: if this application were successful either inside HR itself or at a tribunal, what is the effect of the decision... is it that the overpayments are written off, but my future salary is reduced to what it should have been since January (eg from now on I'll not get the overpayment but the historical payments will be written off); or will the overpayments become my actual salary from now on (i.e. they are estopped not only from recovering past overpayments, but also compelled to continue to pay me at that rate.)

I am pretty sure it's the 1st option (which seems fairest) but the wording of some of the cases and abstracts suggest the 2nd option. By arguing a change of position (and mine will be a new lease taken out in May 2009, and my partner accepting a lower paid job around the same time, based on budgets set around the higher salary) and therefore a breach of equity to demand the money back, because both of these changes of position are long term, does it not apply that the higher salary shall remain payable?

I am asking not out of desire to argue this 2nd point, but to word my response to them correctly.

Thanks for any replies.

You need to give details I'm afraid. How has the overpayment come about and didn't you notice the extra £200 each month?

I've never heard of anyone winning this kind of argument I'm afraid. However, if they've overpaid you at the rate of £200 per month it would be reasonable for you to arrange repayment at the same rate from here on in. What does your employment contract say about overpayments? What should your monthly salary have been? If it was £1k a month you should certainly have noticed the extra £200. If it was £5k per month perhaps you wouldn't.

dmg24

OP, I am guessing that you do not have legal experience? If so, be very careful of trying to apply terminology that you are not comfortable with. Estoppel is not an easy concept!

Cardinal-Red

SueSueSue wrote: »

£200 a month isnt exactly a small amount.

You seem to be clutching at straws and I doubt you have much case to have it written off.If it was £20 a month fair enough.

The only reason you wont post the details as you know it will show you up as a scammer.

A scammer??? Christ almighty!

I didn't post the details because they are not relevant to the case and the post didn't need to be longer than it was, as the question was generally about estoppel rather than my particular circumstances.

Cardinal-Red

dmg24 wrote: »

OP, I am guessing that you do not have legal experience? If so, be very careful of trying to apply terminology that you are not comfortable with. Estoppel is not an easy concept!

What is your point here? That I shouldn't consider this argument because it's not an easy one?

Nice!

zzzLazyDaisy

There is a useful summary on the law relating to overpayments here:

http://www.csp.org.uk/uploads/documents/csp_factsheet_erus25.pdf

To answer your question: if it is a genuine error - for example you were incorrectly put on the wrong pay-scale for your grade, then yes you would be put on the right (lower) pay.

On the other hand, if your contract states your grade and pay, but your employer is now saying that what it says in your contract is incorrect, then there is an argument that the employer is bound by the terms of the contract and in that case, not only should you remain on the current pay, but there has not been an overpayment at all.

As far as your prospects of success are concerned. I doubt that your employer's HR dept will be interested in an estoppel arguement. In that case you would have to wait for them to start deducting the overpayment from your salary, and then make a claim to the ET for unlawful deduction from wages. Whether you can reasonably argue that you really had no idea that the extra £200 each month was a mistake, will depend on the facts.

However, do check your contract. If there is a wages overpayment clause in the contract, then you are contractually bound by that term, and must repay the money.

Cardinal-Red

SueSueSue wrote: »

Of course the circumstances are relevant.

And DMG means dont try and argue legal arguments you dont understand or comprehend.

If you think about it for just 1 second, you'll see they really are not relevant as the question was:

IF an estoppel claim is successful, what is the outcome on continuing salary payments?

Note.... not my salary, or my circumstances, or my position.

And secondly, again, are you saying only lawyers should get protection from an old equity principle, and the rest of us should not as we don't comprehend it?

Surely not?

iamana1ias

Cardinal-Red wrote: »

Details are as follows:

- The difference in pay comes as a result of a geographical allowance, paid to those living and working in London.
- In 2008 I moved to a post in London, which did not attract this allowance.
- When the new systems were moved over, in April, for whatever reason (not related to my actions) I was moved to London payscale, hence attracting this allowance.
- My pay went up in May; in the same month that a payrise from June 07 was paid due to delays
- every month I receive a time based payment instead of the monthly allowance, so every month my salary varies
- the allowance is not accounted for seperately in the payments section
- the allowance is not mentioned anywhere on the pay slip

Clearly people do win this argument as there is legal precedent of it, including the case mentioned in original post I made.

In 1983 the majority of employment contracts would not have had overpayment clauses. In 2009 they do. As LazyDaisy said, you need to check he exact wording of your contract.

I presume your payslip shows your gross salary as being higher than what you were expecting then?

dmg24

Cardinal-Red wrote: »

What is your point here? That I shouldn't consider this argument because it's not an easy one?

Nice!

The point is that you will significantly weaken your argument if you don't understand what you are talking about.

Most Law students have great difficulty with estoppel. Many go on to qualify as solicitors and still have no idea on the subject!

dmg24

Cardinal-Red wrote: »

Details are as follows:

- The difference in pay comes as a result of a geographical allowance, paid to those living and working in London.
- In 2008 I moved to a post in London, which did not attract this allowance.
- When the new systems were moved over, in April, for whatever reason (not related to my actions) I was moved to London payscale, hence attracting this allowance.
- My pay went up in May; in the same month that a payrise from June 07 was paid due to delays
- every month I receive a time based payment instead of the monthly allowance, so every month my salary varies
- the allowance is not accounted for seperately in the payments section
- the allowance is not mentioned anywhere on the pay slip

Clearly people do win this argument as there is legal precedent of it, including the case mentioned in original post I made.

Can you apply the ratio of the above case (Howlett) to your own situation? You will need to if you wish to rely on it.