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If someone has genuinely been overpaid by their employer, then that is not money to which they are legally entitled and it should be repaid. Until the employer owes the employee money they can directly deduct what has been overpaid from their wages. If they do not owe them anything then they cannot just force the employee to repay them and if the employee refuses the employer would have to go to court to try and get a court judgment against them, requiring them to pay.
However, an employee may be able to use the legal defence of ‘estoppel’ to resist an employer's recovery of an overpayment. One of the main cases dealing with this is that of County Council of Avon v Howlett. The employee was a teacher who was paid more sick pay than he was entitled to. The teacher queried the overpayments with the employer but was assured 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 employer from recovering the whole sum of the overpayment.
The way estoppel operates is that if the following conditions are satisfied, then an employee should be able to use it as a defence to resist the recovery of an earlier overpayment:
So whilst there is nothing stopping an employer from pursuing a claim to recover an overpayment, if the above conditions are satisfied then an employee could raise the defence of 'estoppel' and prevent the claim for proceeding any further.
Hope this clarifies your position? If you could please let me know that would be great, thank you and a Happy Christmas
Please let me know if this has answered your original question or if you need me to clarify anything else for you in relation to this? Thanks