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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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I've tendered my resignation with my employer and had I

Customer Question

Hi
I've tendered my resignation with my employer and had I stayed until Xmas I would have benefited from a retention bonus, however the company decided to pay this in April.
I was never asked whether I wanted this early payment or not and I'm now being asked to repay this bonus (in full gross terms), even though I will have stayed with the company for half of the period between April and Xmas.
The bonus is about 20% more than a month's salary so not an insubstantial amount.
Am I legally bound to repay this sum? Does the letter they issued, stating repayment is required if an employee leaves before Xmas, make any difference?
Thanks
M
Submitted: 6 months ago.
Category: Law
Expert:  Ben Jones replied 6 months ago.

Hello did you know you were being paid this bonus at the time it was paid to you?

Customer: replied 6 months ago.
I knew beforehand
Customer: replied 6 months ago.
The letter I referred to was sent before the bonus was paid but it simply said 'you will be paid bonus but you will have to repay if...'
Expert:  Ben Jones replied 6 months ago.

Thank you and why did they pay you this bonus early? Were you specifically told you are expected to remain until Xmas? Did you accept it knowing that you were going to leave soon anyway?

Customer: replied 6 months ago.
Hi
All staff were paid this as a sweetener for a larger annual productivity bonus being withdrawn, to everyone's surprise (overseas owners call)
I didn't know I would be leaving but as I say we had no choice.
My problem is that I don't have it to pay back and I can't afford the hit if they deduct outstanding balance from last monthly pay (in August)
I have asked if it can be spread out over a year but they said only 6 months (4 payments after I've left the company) but none of this agreed in writing yet.
I want to find out my legal position before I agree to anything.
Expert:  Ben Jones replied 6 months ago.

Thank you. The main issue here is if this going to amount to an overpayment of wages. In other words, was it a payment to which you were not entitled and did they have a contractual right to deduct that from your pay in the event it had to be repaid. There is nothing topping them from deducting this from your pay because you cannot prevent what they do with your wages. Your rights really kick in once the deductions have been made and you are then able to consider challenging their actions. This would be done under unlawful deduction of wages legislation.

Under law, an employer can only make deductions from, or withhold an employee’s wages in the following circumstances:

{C}· If it is legally allowed (e.g. to deduct tax);

{C}· If it is to recover an earlier overpayment of wages made by the employer;

{C}· If their contract specifically allows for the deductions to be made; or

{C}· If the employee has given their explicit written agreement for the deductions to be made.

So if it as clear that this was a payment made to employees in accordance with a specific clause requiring them to remain in employment until a specific date AND there was a specific clause allowing the employer to claw that back from your wages in the event you did not remain there as required, they can deduct it, even if it means that your pay is significantly reduced. If these conditions are not satisfied, you can pursue this as an unlawful deduction of wages through the employment tribunal.

This is your basic legal position. I have more detailed advice for you in terms of the steps you can take if you are going to take the matter further, which I wish to discuss so please take a second to leave a positive rating for the service so far (by selecting 3, 4 or 5 stars) and I can continue with that and answer any further questions you may have. Don’t worry, there is no extra cost and leaving a rating will not close the question and we can continue this discussion. Thank you

Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 45306
Experience: Qualified Solicitor - Please start your question with 'For Ben Jones'
Ben Jones and other Law Specialists are ready to help you
Customer: replied 6 months ago.
Thanks for the advise so far but I would like to know if the 'specific clause' would be the letter issued before the bonus was paid?
Also if I left before all the payment was clawed back (essentially insufficient monthly payments to cover the bonus) would they be legally entitled to pursue me for this (when I n longer work for the company)?
Expert:  Ben Jones replied 6 months ago.

the letter could indeed amount to a binding agreement. You were issued it with payment and by accepting the payment you would have implied your acceptance to the terms in the letter. If you did not want to be bound by them you would have had the opportunity to reject the payment and ask for it to be taken back there and then. Also it is possible for them to take action outside of work but whether they do so is another matter. They could just write off the balance.

Customer: replied 6 months ago.
There was no opportunity to reject the payment because there was no mechanism to do so and there were no options on the letter (other than the usual 'Should you have any queries please contact.....' but maybe this in itself would be sufficient for this purpose
I think I know where I stand now
Thanks
Expert:  Ben Jones replied 6 months ago.

In the circumstances a reasonable thing may have been to just contact your manager or HR to query this....but there we go, hindsight is not much help now. Hope this has helped, all the best

Customer: replied 6 months ago.
Cheers
Expert:  Ben Jones replied 6 months ago.

No worries

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