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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 45310
Experience:  Qualified Employment Solicitor - Please start your question with 'For Ben Jones'
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I previously worked employer who privatised my dept

Resolved Question:

I previously worked for an employer who privatised my dept off, so I had a TUPE transfer to the new company taking over. I have just received a letter from my old employers stating that from October 2013 (when the transfer took place) until November 2014 they have still been paying my wages into my account (they apologise for their oversight) and would now like me to pay the money back.
I didn't actually realise the money was going into my account as I got married last year and thought the extra cash was the money my future husband was putting in the account for wedding expenses.
Apparently they were still taking tax, N.I. & pension deductions from the money (as were my new employers too) and the gross amount totals £13,375.93 and after deductions the net overpayment is £11,719.08.
I would like to know if I will have to pay this money back as I have been told by a few different people that they cannot rectify their mistake after a period of 6 months and I shouldn't even acknowledge their letters.
Please can you tell me where I stand legally?
Many thanks.
Submitted: 1 year ago.
Category: Employment Law
Expert:  Ben Jones replied 1 year ago.
Ben Jones : Hello, my name is ***** ***** it is my pleasure to assist you with your question today. Has the money been spent now?
Customer:

Yes I have spent the money as I didn't realise they were paying money into my account as my future husband was putting cash into my account for expenses our forthcoming wedding

Ben Jones :

Hi sorry I was offline by the time you had replied. First of all I should clarify that there is no 6 month time limit as you have been advised for the employer to pursue this. In fact under law they have up to 6 years to take this further if they wanted to.

As far as your legal position is concerned, 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.

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:



  • The overpayments were made due to an error by the employer

  • The employee genuinely believed they were entitled to the money, or did not even realise that they were being overpaid

  • The employee has since 'changed their position', meaning they have spent the money in question. However, this does not mean just spending it on usual items of expenditure, such as bills, everyday spending, etc – you must have gone out of your way and changed your position, such as making additional purchases which you would not have done had you not received that money.


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.

I hope this clarifies your position? If you could please quickly let me know that would be great, as it is important for us to keep track of customer satisfaction. Thank you

Customer:

Ok thank you for the answer Ben. I do have a letter from the finance dept to apologise for their oversight - basically the manager didn't inform the wages dept to stop paying my wages once the TUPE transfer took place, so it was definitely their error. I have spent the money in the account on our wedding expenses, as I genuinely didn't realise the money was still going into the account from them, and thought my future husband was putting cash in there (which he was) to cover wedding expenditure. So I guess what I should do is wait for their solicitor letter to arrive, and use the defence of estoppel or agree a payment plan with them to pay the money back - half of me thinks that it wasn't my money that I spent so I should pay it all back but then the other half thinks that it was their error which I didn't know about until the letter dropped on the mat, so why should I pay it back?

Ben Jones :

I understand your reasons for not wishing to pay but even if it was their error but remember that even if that was the case legally it was not your money in the fist place - errors do happen but it does not mean we should be allowed to take advantage of them. Still...you have nothing to lose by raising this argument at the early stage with the employer now

Customer:

Thank you so much for your advice Ben, I will contact the employer and state my case, mentioning "estoppel", if it doesn't work, I will just have to pay back what I can, when I can.

Customer:

I will now rate you to close this question down.

Ben Jones :

you are welcome, hope you resolve this to your satisfaction

Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 45310
Experience: Qualified Employment Solicitor - Please start your question with 'For Ben Jones'
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