employee overpaid in error

getmore4less

Deleted_User wrote: »

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.

overpayment of wages is one of the exemptions.

http://www.legislation.gov.uk/ukpga/1996/18/section/13
http://www.legislation.gov.uk/ukpga/1996/18/section/14

Section 13 does not apply to a deduction from a worker’s wages made by his employer where the purpose of the deduction is the reimbursement of the employer in respect of—

(a)an overpayment of wages, or

(b)an overpayment in respect of expenses incurred by the worker in carrying out his employment,

made (for any reason) by the employer to the worker

Takeaway_Addict

Uncertain wrote: »

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.

The employee is leaving in 3 months so goodwill most likely doesn't matter. If the employee was staying I would be telling the OP to be more cautious because of this but ultimately they are leaving for whatever reason and if the OP can (and she should check on legal positions) then she should reclaim the money back.

Uncertain

getmore4less wrote: »

overpayment of wages is one of the exemptions.

http://www.legislation.gov.uk/ukpga/1996/18/section/13
http://www.legislation.gov.uk/ukpga/1996/18/section/14

Section 13 does not apply to a deduction from a worker’s wages made by his employer where the purpose of the deduction is the reimbursement of the employer in respect of—

(a)an overpayment of wages, or

(b)an overpayment in respect of expenses incurred by the worker in carrying out his employment,

made (for any reason) by the employer to the worker

That of course assumes that there is a legal right to reclaim the money in the first place. As I have indicated, this is one of the few overpayment situations where that MIGHT not be the case.

Also, IIRC any deduction must not take the employee below the national minimum wage for that month. AFAIK the only exception to this would be in a final salary payment after leaving.

Uncertain

Takeaway_Addict wrote: »

The employee is leaving in 3 months so goodwill most likely doesn't matter. If the employee was staying I would be telling the OP to be more cautious because of this but ultimately they are leaving for whatever reason and if the OP can (and she should check on legal positions) then she should reclaim the money back.

OK, I missed that point.

However, if I was the employee in the situation the OP has described I would be outraged and take every possible step to resist. As I have said I think there are some possible avenues he could explore.

From a practical point of view it would cost the employee nothing to launch an employment tribunal claim for unlawful deduction of wages. I'm not saying he would win but it would cost the OP dearly in time and, presumably, legal expenses to fight. This would quickly amount to more than the sum in dispute even if the OP won.

apples1

Sambucus_Nigra wrote: »

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.

apples1 wrote: »

There is no doubt we overpaid. It is just the fact the the error sits with us (and not him) that made me want to be sure I am being fair on both sides. He is a reasonable chap but yes would have been after every penny of back pay if it were the other way round.

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.[/QUOTE

I am sorry you didn't think I had been clear in my posts about the error being our fault and am whilst I am surprised that you had intrepreted my posts as I had not admitted this fact even to myself its your opinion and that is fair enough. I came on here with two questions: 1, can the money legally be reclaimed and 2, what do most companies do in this situation? I am well aware that many people may have personal views on what they would do but whilst that is fine it wasn't the question I asked. Thank you though for the input.

apples1

Deleted_User wrote: »

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.

yes, this is exactly how it works for us and we use them for exactly those reasons and I wouldn't know where to begin with tax, NI, SSP etc!

Uncertain

apples1 wrote: »

I came on here with two questions: 1, can the money legally be reclaimed and 2, what do most companies do in this situation? I am well aware that many people may have personal views on what they would do but whilst that is fine it wasn't the question I asked. Thank you though for the input.

I though I had answered Q.1 in some detail.

Q.2 - No clear answer as to what "most" would do. I would suggest you take proper legal advice (and make sure you tell them the whole story, not just the points that help your case) then decide. Even if this is favourable you need to decide how much time, money and effort you are willing to spend fighting a claim for a couple of thousand quid.

apples1

Uncertain wrote: »

That of course assumes that there is a legal right to reclaim the money in the first place. As I have indicated, this is one of the few overpayment situations where that MIGHT not be the case.

Also, IIRC any deduction must not take the employee below the national minimum wage for that month. AFAIK the only exception to this would be in a final salary payment after leaving.

It was that I was trying to establish - whether legally the money can be reclaimed. Nothing ever that simple I guess! I don't know what IIRC means or AFAIK but I don't think going below minimum wage would be a problem as he earns approx £30 per hour.

whitewing

apples1

How did you come to discuss the matter with the employee recently? Did you tell him as soon as you realised? Did you realise as he was sitting there? Did you call him in to discuss it?

You do need to seek legal advice on the matter, purely because if you get it wrong it will potentially cost you dearly.

As an employee I would be seriously fed up if this kind of situation happened to me. When I was paid monthly, the payment was rarely the same each month because there were different number of days in the month or holidays or overtime etc. It wouldn't have been that easy to spot on that kind of salary in the jobs I have worked.

I do run a small business now. Smaller than yours. You need legal advice specific to your situation to determine the implications of claiming it back and also the implications of not claiming it back. Plus, as I said before, what will you do if he defaults on repayments? I think it would be unreasonable to expect it back as a lump sum quickly, but the law may have a different opinion.

You also have 3 months more nearly to work with this fellow, so you are going to have to handle that as he is likely to be quite worried or quite angry about the situation. Again, you must get proper advice.

whitewing

apples1 wrote: »

It was that I was trying to establish - whether legally the money can be reclaimed. Nothing ever that simple I guess! I don't know what IIRC means or AFAIK but I don't think going below minimum wage would be a problem as he earns approx £30 per hour.

If I Recall Correctly

As Far As I Know