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Nicola-mod
Nicola-mod, Moderator
Category: Employment Law
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Experience:  Moderator
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I have just found out that I have been overpaid for 5 years. I

Customer Question

I have just found out that I have been overpaid for 5 years.
I have been in the same job for 13 years and about 5 years ago my boss asked me to increase my hours from a 3.30pm finish to a 5.30pm finish which I agreed to but on an 'overtime basis' i.e 2 hours overtime a day, which she agreed to (and has been signing my overtime sheet ever since). We have just found out that I have been paid until 5.30pm PLUS 2 hours per day. I was completely unaware of this as my payslip says '1 unit' (not amount of hours).
I have a very good relationship with my employers and realise that I will probably have to pay the money back but this is making me ill with worry while they look into it.
Submitted: 4 years ago.
Category: Employment Law
Expert:  Ben Jones replied 4 years ago.

Ben Jones : Hello, my name is Ben and it is my pleasure to assist you with your question today. Do you know how much you owe them?
JACUSTOMER-bgz35vo9- : No. As far as I'm concerned, the ball is in their court to tell me how much they have overpaid. But it will be in the thousands.
JACUSTOMER-bgz35vo9- : Ps. I Do have a very good relationship with them and hopefulh
Ben Jones :

The starting point is that if you have been overpaid by your employer, then that is not money to which you are legally entitled and it should be repaid.

However, an employee may be able to use the defence of ‘estoppel’ to resist an employer's recovery of an overpayment on grounds of unfairness. For example, in the case of County Council of Avon v Howlett, a teacher was paid more sick pay than he was entitled to. The teacher queried the overpayments but was told they were correct. By the time the Council had realised their mistake, the teacher had spent most of that money. The Court of Appeal held that the defence of estoppel prevented the council from recovering the whole sum of the overpayment.

Case law has evolved somewhat since then, but it has become an acceptable principle that 'estoppel' can apply if the following conditions are met:

  • The employee genuinely believed they were entitled to the money, or did not even realise that they were being overpaid
  • The overpayments were made following an error on the employer's part
  • The employee has since 'changed their position', meaning they have spent the money in question

So whilst the employer is justified in pursuing the money at this stage, there are ways of defending such a claim. However, that will only potentially be possible if the above conditions are made and if the employee was aware they were being overpaid and did nothing to rectify that, then it is unlikely there will be a defence.

At this stage just see what the employer says and does next - you did state you have a very good relationship with them so if they want you to repay this money, or at least a proportion of it then hopefully you can agree on an adequate repayment plan to suit both parties.

Expert:  Nicola-mod replied 4 years ago.
Hello,

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Thank you,
Nicola