employee overpaid in error

real1314

getmore4less wrote: »

Why was this not all detailed in the written change of contract notification?

One thing will be how obvious would it have been to the employee.

They have a responsibility to check their pay and notify of any obvious mistakes.

I've never heard of an employee having a responsibility to check their payslip to ensure that they have not been overpaid. They may have a responsibility to ensure they pay enough tax, but I think you've invented this responsibility. Clearly if it was an obvious mistake (getting £2k a month instead of £1k) it might be actionable (through court action), but I don't think you'll find any legislation to back up your suggestion.

If there is a history of them being picky then you can reasonably assume they knew and kept quiet.

I think there have been cases where the employer had to forgoe the repayment because it was deemed non obvious to the employee
This would most likely be under the principle of estoppel - that they relied on the employer to get it right.

Some are using the point that the employee might have complained if underpaid, but the employee doesn't really have a responsibility to the employer to get the payroll right; but the employer does have a responsbility to the employee. :cool:

Takeaway_Addict

real1314 wrote: »

Some are using the point that the employee might have complained if underpaid, but the employee doesn't really have a responsibility to the employer to get the payroll right; but the employer does have a responsbility to the employee. :cool:

The employee has a responsibility to make sure they are getting paid correctly....Of course they will check they to make sure they are not being underpaid before being overpaid but once they realise they have been overpaid they have a responsibility to inform their employer

apples1

I cannot know or prove that he knew all along. I have an instinct but it is purely that - an instinct. The answer on whether they are legally obliged to repay cannot hinge on that as he will obviously say he didn't realise if that meant he could keeo it. Simply in law is he obliged to pay it back and is it appropriate to deduct it over his remaining three months? Or is there not a simple yes/no to that?

Sambucus_Nigra

apples1 wrote: »

We do use a payroll company but the responsibility sits with us to check the payslips before we give the go ahead to send the money each month. I checked the overtime and sickness etc for each of the staff but failed to check that the pro rating of his basic pay had been done correctly at the time he cut his hours. It is the basic pay that was wrong and that has stayed the same each month since.

Sorry, but I'd argue that with the contract change, at a take home amount of less than £100 per month on a £1500 a month income - that it's your responsibility to correctly calculate the wages that you are paying out.

I hate all this 'the employer made a mistake, they are human too and the employee needs to pay back thousands of pounds'; the employer has management, accounts, payroll; a number of people whose job it is to calculate and pay wages correctly; and if they can't do their job properly, why should the employee have the hassle of paying it back? And it mucks up the employee's tax as you will want it back gross and they have already paid tax on it; it just becomes an almighty PITA.

It was your mistake - nobody else's. At least admit it to yourself and deal with it by putting it down as an expensive one. And get a calculator in future. Sorry to be so blunt but it really gets my goat.

He could/should argue that it was custom and practice for you to pay this amount over 2 years.

http://www.direct.gov.uk/en/Employment/Employees/EmploymentContractsAndConditions/DG_10037109

apples1

Sambucus_Nigra wrote: »

Sorry, but I'd argue that with the contract change, at a take home amount of less than £100 per month on a £1500 a month income - that it's your responsibility to correctly calculate the wages that you are paying out.

It was your mistake - nobody else's. At least admit it to yourself and deal with it by putting it down as an expensive one. And get a calculator in future. Sorry to be so blunt but it really gets my goat.

I know it is my responsibility and I have admitted to myself (and the employee and on this thread!) that it is down to me. I have said it was my responsibility to check and that I failed to spot it. I don't mind you bluntly (or nicely) saying that there is a legal requirement (if there is) for him to be allowed to keep the money but I do object to you accusing me of not admitting it was my mistake as that is clearly not the case. My posts are very clear on that.

Uncertain

Sambucus_Nigra wrote: »

Sorry, but I'd argue that with the contract change, at a take home amount of less than £100 per month on a £1500 a month income - that it's your responsibility to correctly calculate the wages that you are paying out.

I hate all this 'the employer made a mistake, they are human too and the employee needs to pay back thousands of pounds'; the employer has management, accounts, payroll; a number of people whose job it is to calculate and pay wages correctly; and if they can't do their job properly, why should the employee have the hassle of paying it back? And it mucks up the employee's tax as you will want it back gross and they have already paid tax on it; it just becomes an almighty PITA.

It was your mistake - nobody else's. At least admit it to yourself and deal with it by putting it down as an expensive one. And get a calculator in future. Sorry to be so blunt but it really gets my goat.

He could/should argue that it was custom and practice for you to pay this amount over 2 years.

http://www.direct.gov.uk/en/Employment/Employees/EmploymentContractsAndConditions/DG_10037109

I would largely agree.

The general advice is that an employee has to repay any accidental overpayment.

However, there have been a very limited number of cases where an employee has successfully argued that is was reasonable for them to have assumed that this was their correct pay and that therefore there is no legal liability to repay. I think the best known case was against Barclays Bank.

Regardless of the legal position you also need to consider the effect that this will have on your relationship with this employee. It would be very easy indeed to lose more than £100 a month in goodwill! You have agreed it is your fault.

Finally, to be blunt, I would be very concerned indeed about signalling to an employee that you are in such dire straights that this relatively petty cash amount (in business terms) is critical.

Fire_Fox

If you didn't notice why do you expect your employee to? It's £100 out of £1500 if he only checks the one amount is correct, but if he just keeps tabs on his larger dual income and outgoings he could even more easily not realise. When you are guestimating the effect of increasing or dropping your hours the result is often different to what you think due to income tax, national insurance and pension, having a second job can be even more of a smokescreen.

IMO try chasing the payroll company for at least half your loss, if you have to check every last detail there is surely no point in employing them? At present you are wanting to penalise the one person out of three that has not been proven to make a mistake, and doesn't have any professional responsibility in this field!

Sambucus_Nigra

apples1 wrote: »

I know it is my responsibility and I have admitted to myself (and the employee and on this thread!) that it is down to me. I have said it was my responsibility to check and that I failed to spot it. I don't mind you bluntly (or nicely) saying that there is a legal requirement (if there is) for him to be allowed to keep the money but I do object to you accusing me of not admitting it was my mistake as that is clearly not the case. My posts are very clear on that.

Your initial comment was 'It seems this has been going on for almost two years and stems back to when he reduced his hours with us to do an extra two days at the other job. We use a payroll company to do our payroll and the pro-rated amount of his salary was done incorrectly.'

Not 'I'm an idiot and what do I do about it'. Or words to that effect.

I learnt a long time ago if you are managing anything - just accept the blame at the start if you have indeed mucked something up - it saves alot of heartache.

Which is probably what the person in question has been going through since you have mentioned it to them.

I'd get them in, tell them it was my mistake and I will not be wanting any money back as it was 100% my fault. Even if I had to find that £2.4 k out of my own savings as a loan to the business until I had found a way of sourcing additional funds [if money is really that tight].

[Deleted User]

Do you have an overpayment clause in your contracts? Although not a legal requirement this is becoming more common practice. You cannot deduct an overpayment from an employee's wage without written authority. Having an overpayment clause signed in the initial contract offers you some protection.

[Deleted User]

Fire_Fox wrote: »

IMO try chasing the payroll company for at least half your loss, if you have to check every last detail there is surely no point in employing them? At present you are wanting to penalise the one person out of three that has not been proven to make a mistake, and doesn't have any professional responsibility in this field!

I work for a payroll bureau and we too insist it is our clients responsibility to agree the payments are correct.
Clarity of information from clients can be a problem and payroller's often joke "my crystal is not working today". We pay on notification.
Clients do not have to check every last detail as such, the payroll bureau is responsible for the tax and NI and to ensure compliance with legislation, which many small employers who only have a handful of staff do not have a clue about, nor the capacity to deal with it, which is why they outsource to a bureau.