Been overpaid since Dec 2010....

Star1

Hi all

It looks like I have been overpaid by over £3,000 since Dec 2010, and I think the company might try to claim it back. Here's the full story (I know that I am very fortunate to earn the high salary I do so please no comments...)

In my company, payrises are normally awarded in April each year. However, I was awarded an additional payrise in Dec 2010 to bring me in line with my peers. Also, I work in central London and am therefore eligible for London Weighting. Apparently my payrise in Dec 2010 should have also been to incorporate my London Weighting into basic pay, however I have continued to get London Weighting plus the increased basic pay since then, effectively double-counting the London Weighting (c£250 per month).

My details are:

Old Salary: £56,020
New Salary: £64,500

I know that this seems a big jump, but the average pay (incl London Weighting) for my grade is £70,400, so I am still below average whichever way you look at it.

I do remember some discussions at the time that London Weighting would be incorporated into basic pay, but I don't remember if they specifically mentioned the Dec pay window. I have also unfortunately lost the letter where they told me about the payrise, but it may well have mentioned that my new salary included London Weighting (not sure).

So I guess my questions are:

1. Can they reduce my pay going forward for this double count?
2. Can they claw-back the overpayment to date
3. If yes to 2., can they insist on it back immediately in one lump, or can it be spread over say a year?

This get's more complicated as I will be going on maternity leave in June this year - this means that I will be paying a lower rate of tax next year so will be disadvantaged by any claw-back in the next tax year. It also means that my pay will drop to SMP at some point, limiting my ability to make repayments

Also, Feb and March will be my qualifying pay to work out how much maternity pay I get - can this be reduced because of a clawback (thereby in effect hitting me twice?)

One last thing to add is that my manager said that both herself and my colleague had an issue whereby their basic salaries increased in Dec 2010 to allow for London Weighting, but they were also paid LW that month. However, they didn't have the extra pay increase at the same time so it was picked up that they had been double paid LW and corrected immediately. I'm not sure why noone thought to check mine at the same time (or at least mention to me that this might be a problem)

Thanks in advance for your help and sorry it's so long..

Star x

Jarndyce

Yes they can claim it back and can deduct it at source providing they pre-warn you in writing and it is not more than 10% of your net pay each time. It doesn't matter what has happened to anyone else.

You can argue that it should be reclaimed over a long period - at least the same period as you've been overpaying would be fair.

InsideInsurance

Every employer that I have known to make an overpayment has been fairly reasonable regarding repayment terms. As has been said, they are entitled to have it paid back but you can certainly discuss terms with them.

Star1

Thanks for the quick reply guys. I accept that I will have to pay it back if they ask for it (I haven't spoken to HR yet)

However, I assume I can't be made to be out of pocket for their mistake and they will be responsible for ensuring this? It's just I'm in an unusual situation because of my upcoming maternity:

- Feb & Mar deductions: my maternity pay will be directly calculated from my average pay in Feb and Mar incl "all payments that are subject to NI deductions". Obviously any repayment will lower my NI deductions in Feb & Mar, thereby lowering my average pay and lowering the amount I will receive in maternity pay

- Apr + deductions: Obviously the new tax year starts in April, where I'm expecting to be a lower-rate taxpayer because of my maternity pay. This means when I received the original money I was paying 40% tax but if I pay it back in April onwards I will only get 20% tax reduction, therefore leaving me out of pocket altogether

Just to reiterate, I'm prepared to pay it back. I just don't want to be out of pocket overall because of their mistake and because I'm shortly going on maternity leave

I think this is going to get complicated! Any ideas??

InsideInsurance

Speak to someone in HR, ideally a Business Partner or equiv who has a reasonable brain and express your concerns. They should be able to help you through it.

Going4TheDream

If you have been over paid since December 2010 you have effectively gone over 2 two different tax years and this will also affect your tax paid and ni contributions and any pension contributions paid. Do get the figures they give you checked out, and ask for the calculations that they have used.

I mention this as it happened to a colleague that I used to work with, very similar reasons for the overpayment and as they often did overtime didn't notice the difference in their pay packet as their salary varied month to month, anyway it was decided by the company that it was too complicated to go back over the previous year, as effectively the P60's had been already sent for the previous years etc and it would have meant involving the tax office and the pension provider etc so the ended up only paying back the overpayment of the current year over a 12 month period.

Googlewhacker

Star1 wrote: »

Thanks for the quick reply guys. I accept that I will have to pay it back if they ask for it (I haven't spoken to HR yet)

However, I assume I can't be made to be out of pocket for their mistake and they will be responsible for ensuring this? It's just I'm in an unusual situation because of my upcoming maternity:

- Feb & Mar deductions: my maternity pay will be directly calculated from my average pay in Feb and Mar incl "all payments that are subject to NI deductions". Obviously any repayment will lower my NI deductions in Feb & Mar, thereby lowering my average pay and lowering the amount I will receive in maternity pay

- Apr + deductions: Obviously the new tax year starts in April, where I'm expecting to be a lower-rate taxpayer because of my maternity pay. This means when I received the original money I was paying 40% tax but if I pay it back in April onwards I will only get 20% tax reduction, therefore leaving me out of pocket altogether

Just to reiterate, I'm prepared to pay it back. I just don't want to be out of pocket overall because of their mistake and because I'm shortly going on maternity leave

I think this is going to get complicated! Any ideas??

Ultimately it is your mistake because you would be expected to make sure you are getting paid correctly and if you don't spot any mistakes then when it is picked up it can be as said above claimed back.

I guess its just the way the cookie crumbles, if you had got a bonus in those qualifying period then that would have counted as well towards your average income and thus you would have got double bonus effectively, this is the opposite.

Speak to them, explain your issues and if they are good/nice (and want to keep you) they will sort it out for you.

Star1

Googlewhacker wrote: »

Ultimately it is your mistake because you would be expected to make sure you are getting paid correctly and if you don't spot any mistakes then when it is picked up it can be as said above claimed back.

I guess its just the way the cookie crumbles, if you had got a bonus in those qualifying period then that would have counted as well towards your average income and thus you would have got double bonus effectively, this is the opposite.

Speak to them, explain your issues and if they are good/nice (and want to keep you) they will sort it out for you.

Surely that's not fair! What is to stop a company "accidentally" overpaying women in the month before their qualifying pay, then clawing it back in the following month so they can get away with paying less maternity pay?

Googlewhacker

Star1 wrote: »

Surely that's not fair! What is to stop a company "accidentally" overpaying women in the month before their qualifying pay, then clawing it back in the following month so they can get away with paying less maternity pay?

Because that would most likely be discriminatory, this is not the case with yours as it has gone on for months.

As with anything, it maybe worth you getting proper advice...

Star1

Thanks. I'll see what they have to say first, then get proper advice if necessary. I just hope they will be reasonable!

getmore4less

It't unbelievable the number of people that don't check their own pay

If I got a pay rise, I always checked it made it into the pay packet and what the net pay should be.

Why did you not check your pay?