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Ben Jones
Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 45306
Experience:  Qualified Solicitor - Please start your question with 'For Ben Jones'
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As an employee of an energy company I was informed of how a

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As an employee of an energy company I was informed of how a bonus scheme worked verbally (didn't receive paperwork until I joined officially as it was online). The scheme included a 'deferred' portion of bonus. When I received the bonus notification I asked again if I left before the deferred time was up would I receive the 'mandatory deferred portion' of the bonus. Again I was told yes.
When I left the Company I was informed, 8 weeks after leaving, that the deferred portion was forfeited and I would not receive any of it back. To me it should be described as 'retention' as opposed to 'deferred' and I should be clear this portion was removed as it was mandatory, I was not given a choice to opt in or out. I was provided with a section in a pamphlet (which I had not read as all my answers had been clarified verbally by the HR department) which does state that the portion is forfeit but as I say I had not seen this before and it was contrary to what had been clarified during the recruitment process and on receipt of the bonus notification.
Can you help?
Submitted: 1 year ago.
Category: 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. When was the bonus due for payment and how much are you claiming?

Customer:

The bonus was an annual bonus and indicated to me ~February last year for payment in April. I left in July but was informed that the 'deferred' portion was forfeit

Customer:

The gross amount was ~£3200.

Ben Jones :

Your rights and entitlements would very much depend on the specific wording of the bonus scheme, the conditions and what was actually agreed between you and the employer. A deferred bonus scheme is one where all or part of the payment due gets deferred and is payable at a later date. There could be a mandatory deferral which means that part of your bonus is not payable immediately but gets deferred and become payable at a later date. It is used mainly as a tool for employee retention so that employees do not leave before the deferred part becomes payable. So I am not surprised that a deferred bonus scheme would have a condition that part of the payment would not become payable if you left before the conditions had been met, namely you not leaving before a specific point in time. However, it would still depend on the wording of the scheme and what was communicated to you. If you had a specific and clear bonus scheme which set out the eligibility criteria and the employer then verbally advised you something different, it could be that the official scheme could still take precedence because it was the official reference and was there in black and white. The conflicting advice could be due to a genuine error, misinformation, etc and it would not always overrule the official terms.

Nevertheless if you wish to pursuer this further you can place the employer under some pressure to try and agree a pay out.

Whenever a dispute arises over money owed by one party to another, the debtor can be pursued through the civil courts for recovery of the debt. As legal action should always be seen as a last resort, there are certain actions that should be taken initially to try and resolve this matter informally and without having to involve the courts. It is recommended that the process follows these steps:



  1. Reminder letter – if no reminders have been sent yet, one should be sent first to allow the debtor to voluntarily pay what is due.

  2. Letter before action – if informal reminders have been sent but these have been ignored, the debtor must be sent a formal letter asking them to repay the debt, or at least make arrangements for its repayment, within a specified period of time. A reasonable period to demand a response by would be 10 days. They should be advised that if they fail to do contact you in order to resolve this matter, formal legal proceedings will be commenced to recover the debt. This letter serves as a ‘final warning’ and gives the other side the opportunity to resolve this matter without the need for legal action.

  3. If they fail to pay or at least make contact to try and resolve this, formal legal proceedings can be initiated. A claim can be commenced online by going to www.moneyclaim.gov.uk. Once the claim form is completed it will be sent to the debtor and they will have a limited time to defend it. If they are aware legal proceedings have commenced it could also prompt them to reconsider their position and perhaps force them to contact you to try and resolve this.


Whatever correspondence is sent, it is always advisable to keep copies and use recorded delivery so that there is proof of delivery and a paper trail. The court may need to refer to these if it gets that far.

Whether you actually go to court is a decision you need to make but there is nothing stopping you mentioning court or even spending the money to make the claim (which you can stop at any time) to show the employer you are serious about this and hope that they buckle under such pressure. As the amount is under £10k it will go to the small claims court so the risks are relatively low, for example if you lose you would not be expected to pay the employer's legal costs.

Customer:

Thank you for the note. I am surprised that a Company can make any claim during the recruitment of personnel but unless you check the written notifications fully it is un-enforceable. The section sent to me when I raised the issue with Centrica did look pretty clear, but as I said it was contrary to the clarification I sought and received during the recruitment process.

Customer:

There is a complication in that they overpaid me in my final salary but did not provide a payslip until 6 weeks post final payment. Initially I challenged what they thought they were due and they had made some fundamental mistakes in the amount. This was reduced to something credible but as I say this was well after I had left. I had expected the bonus payment and thought the final salary had included this. The money was then used for some critical building work that was required. Centrica are considering preparing a Collection Order through the Collections Agency but as I am still discussing the two issues together they are holding for an amicable situation. Where do I stand on the requirement for repayment. Again note that the overpayment was due to failures in their internal procedures so I have little faith in anything they send through to me.

Ben Jones :

a collection agency will not be able to do much apart from act in a threatening manner to try and force you to pay - unless the company goes to court and shows you owe them the money and the court agrees they cannot do much - they are just there to act as a nuisance in the meantime.

As far as the law on overpayments stands, 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.

Customer:

Now estoppel is interesting as the 'additional funds' received were assumed to be the payment of that portion of deferred bonus, which I then used in payment for a piece of work required to a wall that had been damaged a few years before but I did not have the funds to pay for the repair. Following the money into the account, which I had expected, it was allocated to this piece of work. I paid the contractor from these funds. It is only after the initial approach from the Collections Agency where I requested clarification and a copy of the payslip as I had not received it did it show that they had overpaid me. But as I say this was after the work had been done and the money spent on the activity. I have attempted to link the two amounts together, the bonus I believe I have been cheated out of based on incorrect information from the Company and the amount of salary overpayment based on the fact I assumed this was money I was expecting and therefore spent it.

Customer:

I should say that I am based in Scotland but I believe Centrica operate under English Law, do you know if this is the case?

Ben Jones :

it would depend on what was stated in your contract, there is usually a statement at the end that says if it is governed by English, or other laws

Customer:

I will check the contract. In your opinion is estoppel a realistic defence in a case I outlined above i.e. expected additional money, used it for a one off item which I hadn't been able to do previously. I do realise it is only your opinion. I am also considering writing to the HR Dept outlining the basis we have discussed without quoting references and noting that there is potential that the recovery of the overpayment may be subject to estoppel (would this still be subject to small claims courts and can they use English Law in Scotland or would any court action would be from an English court). I would be looking to use this to encourage a settlement.

Ben Jones :

there is a reasonable case for estoppel but it is ever so difficult to predict whether it will be accepted by a court or not so I can't really say much further than just make you aware that it can be raised in the circumstances. They can make a claim in the English courts and pursue you even if you are in Scotland, assuming the contract is governed by the laws of England

Customer:

Thank you and I accept these things are difficult to predict I just wanted to use the potential and the basis for estoppel to strengthen my negotiation over combining the two issues and making an offer to pay the difference between the two. At present Centrica are saying that the full amount of repayment is due and none of the bonus should be paid but I believe there might be an accommodation reached with the reference you make above.

Ben Jones :

there could indeed and it is now down to negotiations between you and the company, neither has to take this to court, it could be resolved amicably and it would be in the interest of both parties to do so but neither can you force them to accept your position hence you would just have to use the information you have to your advantage and see where this goes

Customer:

I think this may be the best way forward and will look into it a little more. Appreciate your help on this.

Ben Jones :

you are welcome, best of luck

Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 45306
Experience: Qualified Solicitor - Please start your question with 'For Ben Jones'
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