Ex Employer wanting bonus payment back.

Bango

Hi
My brother took voluntary redundancy in August of last year and started his new job in September.
Several months later he received a letter from his previous employer saying that "as a good leaver" he was entitled to the annual incentive bonus for 2013 which would be pro-rata for what he worked in that year. Not sure if he used to get this bonus every year when he worked there or not.
The money was transferred into his bank account within a few days of the letter. The company must have kept his account details and they did not ask him to provide these details again.
He duly use the money in good faith to pay off his overdraft and part of a loan he had.
A few weeks later he received another letter from the previous employer saying that they had made an error and that he was no longer entitled to this money and that he had to pay the net amount back within 10 days.
He has since had other letters saying they are still waiting for money back, and could take further action to recover the money.
What I want to know is, does he have to pay the money back? They put it directly into his bank account and sent the letter saying he was owed it.
If he does can he legally say that he will pay the a basic amount back of £10 a month?
He doesn't have much spare cash every month and this is all he can afford without going over his authorised overdraft and incurring fees.
Any help on this would be really appreciated.

tomtontom

What does his contract say about bonus payments, and what has he received in previous years?

pmlindyloo

Is there is something in the contract about being paid pro rata for a bonus after leaving or does it say that no pro rata payment is due when you leave?

Basically, if your brother was aware that he should not have received it then he should have contacted them and queried it.

If, however, there was no mention of anything then your brother may have the right to challenge this repayment.

The only was they can get the money back if your brother refuses to pay is to take court action. This could be costly and a hassle for both parties.

As always the best way forward in these cases is negotiation. He needs to speak to his employer and explain that he knew and misunderstood or that he accepted the money in good faith.

To be honest the simplest solution if they refuse to back down is to ask for a repayment plan at what he can afford. In the end that is probably all that the court would demand from your brother unless we are are talking about a huge sum of money.

Bango

He wasn't expecting a payment, the letter he got said as a "good leaver" (its was quoted like that in the letter) he was eligble for this bonus. The other people he worked with all got the payment and then were asked for it back aswell.
They used to get an annual bonus, but the company changed name and i think re-issued contracts. I don't think he has a copy of this contract.

agrinnall

If the money had turned up in his account unexpectedly then yes, I would recommend repaying it, but in this case he was perfectly entitled to believe that it was transferred in good faith and could be spent. Unless it's a large sum I would be surprised if the ex-employer takes it as far as court action, and even if they do I can't see any reason why the court would do more than tell him to pay it back, probably in instalments, so he'd have nothing to lose by calling their bluff. It's their error, they should learn from it.

whitewing

Normally I would say pay the money back but I think, from what you have said about 'good leaver' and prorata'd payment he could justifiably have used it in good faith by the time he was told it was a mistake. I would be inclined to fight this one I think. Perhaps they only paid some redundant people and legal action has been threatened by other leavers so they decided it would be cheaper to reclaim.

Lakeuk

Personal view - If I'd received a letter that stated "as a good leaver" I'd be thinking, how good of them to thank me for my work during period of impending redundancy, it wouldn't ring alarm bells as being a mistake, certainly with my employer.

With my employer it's not something that is in our contracts, I've seen it given a number of times over the years, sometimes the union has agreed it usually when big changes are happening, other times local management have got agreement for a pro-rota bonus to be paid, usually when it's clear the individual has/will be contributing the company goals in the year so far and any transition of skills.

Bango

Thank you for all for your views on this.

He used to work for a company that was and i think still owned by a bank, so when he got the letter, presumed that the payment was correct and that he got it because he just worked out his notice without kicking up a fuss or taking the mick and not putting any effort in.

We are not sure of what our next step should be.

Do we email them saying that they can go whistle for money back, or arrange to pay a small amount back each month, or basically just ignore the letters and see if they do take this to a collection agency or court?

pmlindyloo

Bango wrote: »

He wasn't expecting a payment, the letter he got said as a "good leaver" (its was quoted like that in the letter) he was eligble for this bonus. The other people he worked with all got the payment and then were asked for it back aswell.
They used to get an annual bonus, but the company changed name and i think re-issued contracts. I don't think he has a copy of this contract.

This all now gets a bit messy.

First of all 'the company changed name and issued new contracts' - this needs investigating - if new contracts were issued then these new contracts should have been discussed. You should find out exactly what happened. Was the company sold?

'Other people he worked with all got the payment......' What are they doing? Do they have contracts? Can they all work together on this?

All these points need investigating.

Once your brother has all the information then I suggest he visits CAB (choose one with an employment specialist) or speak to ACAS.

You could write and saying that you were seeking advice on this matter from **** and will contact them soon. They will probably have solicitors so they will be being advised too. If they know they haven't got a legal leg to stand on then they may even back down or reach some compromise/repayment plan.

t0rt0ise

I wouldn't suggest a repayment plan just yet. I'd be asking them why they want it back and see what they say. Even after that I'd probably leave it and see if they intend to take court action. There's a good chance they'll simply forget about it.

Bango

We have decided to email the ex-company requesting a full explanation of to why they wanted the payment back, and who authorised the original payment and letters to be sent and also a signed copy of the new contracts. We have given them 21 days to get back to us on this.
So basically the ball is back in their court and just need to wait to see if we get this information.
I'm tempted to send the email in the post recorded delivery aswell, so they cannot come back and say they never received it!
Thanks again for all your views on this.