Rights re over-payment of final salary

Pheebs67

Hi Folks, wondering if anyone can advise?

My wife recently resigned from her old job following an extended period of Maternity leave (she felt the position she was being offered to return too wouldn't work for family life). She left mid-May and was paid her "Final salary" at the end of May.

The company failed to pay her her holiday pay that was due, so she had to chase that and eventually got an amount in June. (Although the company couldn't quite decide what holiday she was actually due).

Fast forward to now - and we've had a letter from them (via an outsourced outfit) to say that they now realise that they overpaid her in her final salary amount, because they paid her for the full month of may - rather than just the first half she was employed for, and so they want their over-payment back.

Given she was on unpaid leave, there was no actual salary involved, but a small car allowance, so it seems we got ~£400, but should only have gotten £200 for the first half of the month.

They've now recalculated her final pay - and basically show that they didn't account for paying her holiday, and so we owe them the ~1/2 of the car allowance, but in doing this, are now taking an amount of tax that equates to the whole of her holiday amount (we're talking thousands here).

So I'd agree we probably (morally) owe them the 1/2 of the car allowance, but dispute how we can be liable for a tax bill the same size as her total holiday allowance.


We've got 4 bits of info - The new re-calculated / adjusted statement, the amounts she actually got in her bank account, the figure of the holiday amount she was quoted as being due on an email exchange with a manager, and her P45. None of these amounts correlate with each other.


Now given the above, I don't trust any of the calculations to be confident that morally we do actually owe them anything, but in terms of legal (not moral) rights - if the Employer has over-paid her through their own incompetence of generally having a shocking HR department that can't manage data properly, are we legally bound to repay any over-payment some 5 months after it was paid to us?

They've stated we must repay it within 14 days too.

Anyone any advice?

Comms69

The tax issue doesn't make sense.


Yes you are obliged to repay, even if it's their mistake.


Ignore the 14 day limit, that's arbitrary

Undervalued

Pheebs67 wrote: »

Now given the above, I don't trust any of the calculations to be confident that morally we do actually owe them anything, but in terms of legal (not moral) rights - if the Employer has over-paid her through their own incompetence of generally having a shocking HR department that can't manage data properly, are we legally bound to repay any over-payment some 5 months after it was paid to us?

They've stated we must repay it within 14 days too.

Anyone any advice?

In all but the most exceptional circumstances (which don't apply here!) then yes they can reclaim any overpayment for up to six years (five in Scotland).

However she is certainly entitled to ask for full details of how the amount is calculated and obviously dispute anything she feels is wrong.

Tax is payable on the holiday pay which they have presumably deducted in the normal PAYE way. If ultimately she has paid too much tax she can reclaim it from HMRC.