Overpayment from previous employer

The_GOAT_2

Hello,

I read that the CAB forum is now closed so I am hoping that this is the correct place.

I recently graduated and left my previous employer for a job in Aberdeen. I had served three weeks of my required four weeks’ notice however, I kept them well informed about my intentions and even though I left early there were no bridges burned.

I was paid a full month’s wage, even though I left 7 days early, however, was well aware that I would likely be overpaid if I was to leave early and have to re-pay the amount.

The dispute I have with them is the way they have calculated the figures of money owed:

I left on the 23rd of the month with three and a half shifts left, equating to 31 hours. Added to this, I had also 'overspent' 11.5 hours of holiday totalling 42.5 hours owed back.

I calculated the amount owed as £6.79 x 42.5 = £288.58, however they have divided my monthly wage by 31 (days of the month) and multiplied it by 23 (the date I left) giving a daily average accrued and subtracted it from my months wage. So in essence they are charging me for 8 days’ pay at their figure of £388.79.

I wrote to my employer explaining my stance and informing them of my interpretation of the correct figure and also asking about the plausibility of repayment instalments, based on the fact that even though I am in Aberdeen, I am not on 'Oil & Gas money' as they had assumed previously in contacts, and that I was merely a graduate.

The reply I received was that they understood how I had calculated my figure 'however, this method of calculation was the method (they) had inherited from their parent company (which was a council) and that was the way it had always been' and that instalments would not be possible and the money was to be repaid by Friday 13th (e-mail was sent on Tuesday 8th).

From this I explained that I was unable to repay the money in full and that I would seek alternative advice. They have since sent another deadline for the money which has also passed.

I am prepared to repay the money that I owe them, however, I cannot repay the amount in full and secondly, out of principle I refuse to pay them an extra £100 purely because their method of calculation is based on tradition and not common sense.

Where do I stand? Shall I re-offer to make payments in instalments for the amount of £288?

Thank you in advance for any help.

Tixy

Did you always do a set number of hours per week/month?

Were you paid a salary? or paid an hourly wage?

It may be worth checking your contract or any staff handbook to see what it says in there in relation to starting/leaving mid month (e.g. in my firm's handbook it states that if you join or leave mid month you will be paid 1/20 for every working day you work that month (despite most months having 22 or 23 working days in the month).

But in principle if there is nothing in your contract/staff handbook and if you were paid by the hour then I would stick with your assumptions and write back stating that you are not in a position to repay in full but offering a repayment plan and the first payment.

How much can you afford to pay now? and can you afford to repay the rest on your first payday of your new job?

The_GOAT_2

I worked shifts but essentially it was an average of 34.5 hours a week.

I can understand, to a degree, about them paying an average, as it is easier to work out, however, easier for them = -£100 for me.

I requested my contract but they simply sent me a front page, without any legal jargon on it. I shall request further specifics.

*How much can you afford to pay now? and can you afford to repay the rest on your first payday of your new job?*

I was going to suggest to them upto £50 a month. I am being paid more in my current job, however, having to pay for travel and digs up here myself, I am essentially earning what I was in my previous job and coming out with £250 a month to spare not including essentials ie food.

SeduLOUs

Presume you were paid this money through payroll? Are you a taxpayer?

If so, bear in mind that if you do pay them £288.58 this is a gross pay figure on which you have already paid tax and NI when it was first paid to you. It is likely to have cost you well over £50.

Any repayment back to them should be calculated through the payroll system again and you would give them back the 'net' only, but they probably aren't going to be willing to do this if they have already issued P45.

If you do pay anything back to them directly, get receipts as you can probably approach HMRC with this and explain so they can adjust your tax code to get you the tax you have overpaid back.

The_GOAT_2

'Yes' to both questions. So what you are saying is essentially, if I was to pay them £288.58, they would be 'making' £50 from me by way tax etc?

Tixy

In terms of the amount you can afford I suppose from their point of view they paid you for a week (ish) that you didn't work, and presumably your new employer also paid you for that week. So you should have the funds available to repay them.

However in reality if you make a repayment offer and start those repayment then for such a small debt I would think it is unlikely they will take any further action.

SeduLOUs

The_GOAT wrote: »

'Yes' to both questions. So what you are saying is essentially, if I was to pay them £288.58, they would be 'making' £50 from me by way tax etc?

Well no, they wouldn't be making any money as they pay it over to HMRC, but you will have overpaid tax.

Simple example to try and illustrate:

Employer pays you £300 gross wages. It goes through payroll, tax is deducted etc and you come out with £250 net pay.

Employer says you have been overpaid and you give them the £300 back directly.

You are out of pocket £50.

Tixy

They won't make any money out of your tax - they will have paid over that amount of tax to HMRC currently.
If they didn't recalculate your salary properly but expect a repayment from you then it is HMRC that would end up with the 'additional' £xx

The_GOAT_2

Sorry for the delay; I appreciate the responses.