'Overpaid' after job termination

lesleystrawson

I was informed of my employer's (local council) decision to terminate my contract after 4 months of working with them. It was a permanent contract with a 6 month probation period, so although I was unhappy with the decision, knew that legally I didn't have a leg to stand on. When told this by the head of personnel and my line manager, I became very distressed and informed them of my decision to leave (half way through my day's shift) and not complete the day's work, which they entirely agreed with and let me go.

After a long discussion with my husband, I went to the office the following day and handed in my notice (rather than have a termination on my CV). Two days later, I received a letter from the Head of Personnel agreeing to a feedback meeting, and stating;

'As discussed yesterday, we do not expect you to work your one month notice period and will arrange for you to be paid in lieu of notice'.

I received my normal monthly pay 3 days later, and then the following month on the normal pay date, received a reduced month's salary, NI unpaid, which I took to be the money from my, what I presumed to be, unworked notice period.

Yesterday I received a letter from the Payroll section stating that I have apparently been overpaid, due to payroll 'not being informed of my termination date in time for the payroll', and now that I no longer work for the council they are going to get someone from the Recovery Section to contact me to arrange recovery of the outstanding amount.

Can someone advise me please - Have I read the letter wrong thinking that my unworked notice period would be paid? Do I have to pay the money back if indeed I shouldn't have been paid? What sort of terms and conditions can I impose for repayment?

Any help gratefully received

Lesley

CFC

You can speak to the Payroll department to find out if you have actually been overpaid or not. You are entitled to be paid your month's notice, as your manager stated.

If you have been overpaid, they do have the right to request the money. However, you can make arrangements to repay it which suit you, and if you choose not to repay it I have never heard of anyone being taken to court to repay a month's overpayment, as the amount involved vs the worktime involved to do so never makes it cost effective to pursue.

Jarvisma

The company I used to work for have taken several people to court to recover overpayments and they have been as little as a month's salary, so this isn't necessarily true.

BUT, that is a long way off and you shouldn't start worrying about that yet.

So that we can establish whether you have been overpaid or not, what date did you actually leave? and what date would you have left if you had worked your 1 month notice period?

Also surely it should have given some description on your payslip of what the gross payment was for. For example on our payslips I would have expected to see for the previous month's pay SALARY £xxxx on the left and then the relevant deductions on the right, then on this last month's PILON £xxxx then if no other moeny was involved, no deductions and the net payment of the PILON.

The payroll dept may have been told that you left your job immediately but may not have been told that HR had said they would still honour your PILON, so they may think it is an overpayment when it actually isn't.

The best thing to do is call and speak to them, or the HR department to determine whether it is actually an overpayment, and ask HR to explain clearly if you have been paid your PILON how it has been calculated and when was it paid, and if you haven't ask why not given that you have a letter from them stating that it would be paid.

Keep us updated, sometimes it's good just to have someone to run things by.

lesleystrawson

Ok - a bit of an update...

Finally got round to ringing them up today. It appears that my PILON was paid in my April 'pay packet', however it is the March wages they have an issue with.

I resigned on the 14th of March. I was paid on the 20th of the month as normal, with a full pay packet. According to my ex-employer, the pay covers 1st-31st of the month, therefore I should only be paid for 14 days of work.

What I don't understand is the amount I am expected to pay back.

My gross salary was normally £624.05 a month (£551.73 into the bank).
They deduce I owe them £342.22.
This has been calculated by taking my gross pay, dividing it by 31 (days in March), then multiplying this by 14. This gives me the figure of £281.83. They have taken this figure away from my gross salary, leaving us with the overpayment of £342.22.

I presume this amount is overly large as they want me to 'pay back' tax/NI, but I am confused by this, and wondered is someone could explain this to me in plain English. My husband doesn't see why I should be out of pocket because of their error!!!

I signed on for JSA for 4 weeks straight after I resigned, who back paid my NI for me from the time I left. I am currently marking exam papers but will not see the cash for this until the end of July at the earliest. How much money do people think I should be paying back?

Thanks again - hope this all makes sense.

Lesley

Jarvisma

They haven't calculated it correctly.

If £342.22 is the gross overpayment then not only would you be due a refund on the tax and NI paid on that £342.22, but you would also pay less (in fact probably no tax) on the remaining £281.33.

Therefore lets assume you had no other payments and you should have only received £281.33, this would have been below the thresholds for TAX and NI and you could possibly have received a small tax rebate in light of this.

You should go back to them and ask them to check their figures as you don't believe they have taken the tax and NI into account.

Any decent payroll department will give you a breakdown of the tax and NI calculations involved. They have caused themselves alot of grief though as this obviously now relates to a previous tax year so they will have to notify HMRC and will need to give you a corrected P45 and / or P60 whichever you got depending on the date you left.

Let us know what they say after you ask them for this, by all means I can check it for you if you like..

lesleystrawson

Grrrr...my response...

The amount that has been quoted to you was the Gross figure which does not include tax or NI rebates, this is because all deductions for the previous financial year (2006/2007) have been paid over to HMRC and as a result can no longer be refunded through the payroll. However, if you contact HMRC they will be able to assist you in recovering the deductions that were incorrectly paid due to the overpayment.


The National Insurance was worked out and should of given you a rebate of £18.28.

Your Tax would not have been given a rebate as your tax code was on a Week1/Month1 basis, however, you are owed a rebate of £16.60.


If you contact the HMRC (0845 3003949) with this information they should be able to refund you the outstanding amounts. I am happy for you to give them my name to HMRC as someone to liaise with if needed.

Why should I have to go to all the hassle of claiming this all back? Can't they call HMRC directly?? I am now claiming JSA so have offered to pay back £10 a month - not heard their response to that bit yet!!

welshman10

Just tell them to whistle for it. As someone said above, it will not be cost effective for them to pursue it further than a couple of letters anyway.

HappyG1rl

Am I misreading this post?

I am under the impression that you handed it your notice on 14th March. Your employer didn't require you to work your notice period but would pay it in lieu. That means you should be paid up to 13/14 April.

On 20th March you received a month's pay to cover the period 01-31 March.
You then received pay on 20th April which was for a partial month and presumably covered the period 01 - 14th April.

If so it does not appear that you have been overpaid......unless I have misunderstood.

Also, did you qualify for any holiday pay that you have not received?

jobbingmusician

The above sounds very sensible. I, too, agree that it sounds as if your full pay should be until 13th April. Do the following.

1. Make an offer of £1 per month towards any overpayment.

2. Ask them to send full details of the overpayment, with details of how holiday pay has been calculated.

Do number 2 ONLY if you are confident that they owe you holiday pay. If you think you may have taken more holiday pay than you are entitled to, keep quiet about this!

viktory

Many years ago my husband worked for an awful company. When he left they mistakenly paid him another full months wages. They demanded it back - we spent it. They did nothing. We saw it as compensation

Jarvisma

lesleystrawson wrote: »

The amount that has been quoted to you was the Gross figure which does not include tax or NI rebates, this is because all deductionsfor the previous financial year (2006/2007) have been paid over to HMRC and as a result can no longer be refunded through the payroll. However, if you contact HMRC they will be able toassist you in recovering the deductions that were incorrectly paid due to the overpayment.

This is incorrect. This has really annoyed me now so I have made it a personal mission to check it out! I have just come off the phone to a very nice tax inspector (wow!) called Christine at my tax office in Gloucester and she has catagorically confirmed that an employer is NOT ALLOWED to request anything more than the net amount of any overpayment from an employee.

They must then submit an ammended P14 and P35 detailing the corrected figures for 2006/07 (or relevant year) and a refund of the incorrect tax will be forwarded to them or granted to be offset against their current year's liabilities.

If you take this further keep in touch with me, I'm sure she would be happy to provide this in writing.

lesleystrawson wrote: »

The National Insurance was worked out and should of given you a rebate of £18.28

Are they saying you should have had this? In which case have you?

lesleystrawson wrote: »

Your Tax would not have been given a rebate as your tax code was on a Week1/Month1 basis, however, you are owed a rebate of £16.60.

Do you know why you were on a w1/m1 code? How long have you been working there and did you give them a P45 when you started?

lesleystrawson wrote: »

If you contact the HMRC (0845 3003949) with this information they should be able to refund you the outstanding amounts. I am happy for you to give them my name to HMRC as someone to liaise with if needed.

This is complete rubbish. They are simply trying to get out of doing quite a bit of work on their part and shirking their responsibilities. I loathe payroll departments thay try and confuse employees with jargon and processes which they do not and should not have to understand.

lesleystrawson wrote: »

Why should I have to go to all the hassle of claiming this all back? Can't they call HMRC directly?? I am now claiming JSA so have offered to pay back £10 a month - not heard their response to that bit yet!!

You shouldn't. I think you should write them a further letter stating firmly that you are aware on advice from HMRC that they are not complying with HMRC guidelines by requesting a gross repayment and any attempts to recover that money in it's gross form would be incorrect and unenforceable.

You could suggest again that you are willing to repay the NET amount in instalments of £10 per month and no more and it is up to them to submit an ammended P14 and P35 and reclaim the incorrectly paid tax and NI.

In light of the fact that they have made such a c**k up of this anyway, I'm also happy to have a good look at the two payments just to make sure there is even an overpayment to repay, unless you're positive there is. It wouldn't surprise me if they'd got that wrong as well.

Don't let them try and confuse you and if you want any help let me know x

(BTW - I should point out, I don't hate ALL payroll Depts, I am after all a Payroll Manager, and I love mine they're fabulous! I just loathe lazy and unprofessional ones that give my profession a bad name!)