'Overpaid' salary deducted from my redundancy?

thundercut

Hi there - new here, so please be nice :0)

I hope this makes sense.

I was made redundant in June. Fortunately, I've started a new job.

However, my previous employer (a very large bank) made a mistake. For June’s pay you had received a full month’s salary from 1st June to 30th June as you were not made a leaver on the system in time for the June pay run. Therefore you had been overpaid by £xxx (gross). You should only have received £xx (gross) for pay from 1st to 7th June. The overpayment of £xx was then deducted from your redundancy payment.


Are employers allowed to deduct from a redundancy payment in this way, as surely redundancy does not count as a 'wage'? As my redundancy payment is under £30K, I thought it was not subject to tax and NI, where as obviously I have ended up paying tax on the overpayment and they have deducted the full gross pay off my redundancy. I'm a bit peeved that they just took this money without any discussion with me.


Are they able to do this, and how do I get the tax and NI contributions back I've made, which I think that I shouldn't have paid?

hcb42

well they are probably right to claw it back , I wouldnt blame them for doing that, but they need to correct the payroll for actual earnings this year etc so your tax is not affected.

you would be able to get the tax back though.

Debt_Free_Chick

thundercut wrote: »

Are employers allowed to deduct from a redundancy payment in this way, as surely redundancy does not count as a 'wage'? As my redundancy payment is under £30K, I thought it was not subject to tax and NI, where as obviously I have ended up paying tax on the overpayment and they have deducted the full gross pay off my redundancy. I'm a bit peeved that they just took this money without any discussion with me.


Are they able to do this, and how do I get the tax and NI contributions back I've made, which I think that I shouldn't have paid?

Yes, they are able to do this. It doesn't matter what payment was due to you, the Bank was allowed to deduct any sums you owed from it.

Deducting the gross amount is an annoyance though and I'm surprised they've done this. They should have reversed all the relevant payments and deductions out from the redundancy payment. The income tax & NI should sort itself out over the course of the tax year. But you may need to monitor this and, if necessary, complete a tax return or put a claim in to HMRC at the end of the tax year.

thundercut

Debt_Free_Chick wrote: »

Yes, they are able to do this. It doesn't matter what payment was due to you, the Bank was allowed to deduct any sums you owed from it.

Deducting the gross amount is an annoyance though and I'm surprised they've done this. They should have reversed all the relevant payments and deductions out from the redundancy payment. The income tax & NI should sort itself out over the course of the tax year. But you may need to monitor this and, if necessary, complete a tax return or put a claim in to HMRC at the end of the tax year.

Thanks for your advice. How annoying then I have to sort out a problem which they caused. I could really use the money now instead of having to wait!

[Deleted User]

No No No! They can only deduct an overpayment of salary with written permission, but this does include if there is a clause in your contract saying they can, if not then this is an unlawful deduction. Also as you said this should be a Gross deduction from taxable pay, if they have deducted it from a non taxable payment (redundancy) then you have suffered the tax and ni and this will not be corrected. You are also not usually allowed to deduct anything (exept obv tax and nics) from Statutory payments (SMP & SSP) as this is the statutory minimum. I am unsure if this extends to redundancy. I will find out for you.

getmore4less

Check what they have actualy paid,

whats on the P45.
what about acrued untaken holiday
did you work notice
was it statutory or enhanced redundancy.

was the redundacy paid as part of final or after P45 was issued.

antrobus

thundercut wrote: »

.....
Are they able to do this, and how do I get the tax and NI contributions back I've made, which I think that I shouldn't have paid?

Q. Can I issue another P45 because I have discovered a mistake on the original? A. You must not issue a duplicate P45 under any circumstances.
If you have not issued the P45 to the employee or the PAYE tax office (or sent it online), destroy all four parts of the incorrect one and complete a new one.
Do not score figures out or use correction fluid on the P45. All four parts of the P45 must have identical entries.
If you made an error on the P45 and have already sent it to the employee and/or PAYE tax office (or sent it online), you should send a letter to your PAYE tax office confirming what the errors were and also send a copy of the letter to the employee.


http://www.hmrc.gov.uk/employers/p45-employee-leaves.htm#6


What gross pay is on your P45? If it's the original wrong figure then your employer should have followed the instructions above and written to HMRC and given you a copy of the letter.

marybelle01

Deleted_User wrote: »

No No No! They can only deduct an overpayment of salary with written permission, but this does include if there is a clause in your contract saying they can, if not then this is an unlawful deduction. Also as you said this should be a Gross deduction from taxable pay, if they have deducted it from a non taxable payment (redundancy) then you have suffered the tax and ni and this will not be corrected. You are also not usually allowed to deduct anything (exept obv tax and nics) from Statutory payments (SMP & SSP) as this is the statutory minimum. I am unsure if this extends to redundancy. I will find out for you.

Actually - Yes, Yes, Yes! Redundancy pay does not count as wages or pay. And deductions to correct an error in pay are exempt from the laws on deductions from wages anyway. http://www.direct.gov.uk/en/Employment/Employees/Pay/DG_175878

thundercut

Hmm - thanks for all the advice; its really appreciated.

My employer hasn't responded yet, as I have also queried why I was not paid for annual leave accrued but not yet taken.

Are there any hard and fast rules as to how quickly these matters should be resolved? It just makes me smile, that, obviously as a bank, they'd fine personal customers for late payments on credit agreements etc!

thundercut

antrobus wrote: »

Q. Can I issue another P45 because I have discovered a mistake on the original? A. You must not issue a duplicate P45 under any circumstances.
If you have not issued the P45 to the employee or the PAYE tax office (or sent it online), destroy all four parts of the incorrect one and complete a new one.
Do not score figures out or use correction fluid on the P45. All four parts of the P45 must have identical entries.
If you made an error on the P45 and have already sent it to the employee and/or PAYE tax office (or sent it online), you should send a letter to your PAYE tax office confirming what the errors were and also send a copy of the letter to the employee.


http://www.hmrc.gov.uk/employers/p45-employee-leaves.htm#6


What gross pay is on your P45? If it's the original wrong figure then your employer should have followed the instructions above and written to HMRC and given you a copy of the letter.

I'm not sure re: P45. I don't know if they've already issued one, as I've not received it, or if they are waiting to resolve the matter first.