Many thanks for your patience. If someone has genuinely been overpaid at work, the employer may rely on the common law remedy of restitution based on a mistake of law or fact to recover the overpayment in the civil courts. Restitution attempts to prevent the unjust enrichment of the worker at the expense of the employer.
If a claim for recovery is made by the employer, the employee may be able to use the legal defence of ‘estoppel’ to resist it. The case of County Council of Avon v Howlett dealt with this issue and identified three conditions that must be met for estoppel to succeed:
· 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. It would not include turning a blind eye when they knew 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 rent, mortgage, bills, everyday spending, etc – there must have been a significant, precise or substantial change of position.
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' in court and potentially resist the employer’s claim.
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