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Ben Jones
Ben Jones, UK Lawyer
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Experience:  Qualified Solicitor
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I was overpaid in my redundancy payment by a significant

amount. My ex-employer wants, understandably... Show More
amount. My ex-employer wants, understandably, for me to pay the money back. I am reluctant for a number of reasons: 1) they made the mistake 2) I noticed it was more money than I was expecting, but I didn't realise how much more and 3) It has caused me considerable disappointment, stress and inconvenience - mostly upset and stress as people have been advising me to keep the money saying it's there fault and is a civil debt now. They could try to reclaim it, but it could be a very long drawn out process for them. I'm not trying to cause problems for them, and I believe it was a genuine admin error, but at the same time, when I asked for a breakdown and said that I believed they should pay me some compensation, they declined and said they don't agree that I am due anything in the way of compensation - which has only made me more upset and angry with them. Not the way I wanted to end my 17 years of employment with them.
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Hello, my name is***** am a qualified lawyer and it is my pleasure to assist you with your question today.

How long ago was the redundancy payment made to you and how long after this has the error been picked up by your previous employer?

Customer reply replied 1 year ago.
Payment went into my account on Monday and I think I was contacted a day or two after. I'd have to check for sure. Not at home at present to check

Thank you for your response. I will review the relevant information and laws and will get back to you as soon as I can. Please do not respond to this message as it will just push your question to the back of the queue and you may experience unnecessary delays. Thank you

Many thanks for your patience. 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. Whilst you were disappointed that they did mot offer you any additional compensation, that is not a reason to keep the money because unless you had the contractual right to enhanced redundancy, they would have only been obliged to pay you the statutory minimum amount.

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.

Also note that there is no guarantee that they will take this matter further such as through the courts. This is indeed a civil debt so do not worry about criminal implications. It all depends on them deciding that it is worth issuing legal proceedings in the county court as to whether this goes any further. They may issue threats and send debt collectors after you but only a court can force you to pay so you would be relying on the employer deciding it is a debt worth pursuing.

This is your basic legal position. I have more detailed advice for you in terms of the law on estoppel and how it applies, 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

Customer reply replied 1 year ago.
Thanks. There are more details to this case as follows:
I was provided with an initial estimate of the severance payment, which was in the region of £75K. This is pre-tax.
Time passed and I was awarded a pay rise - which the company determined (as a result of union pressure) to include in our redundancy payments, so I was sent a further letter showing the severance payment around £78K. When I actually got paid, the letter I received showed that I had been paid £87K after tax. I did think this was strange, but to be honest, I hadn't paid too much attention to the exact figures earlier and I also thought (as it was all broken down with tax etc. on the form I received) that it was a statement much like a P60 or P45 - showing tax paid to date, total net to date, etc. So I didn't realise that the £87K was necessarily the severance pay. I then received the money into my account and could see it was a lot more, but I didn't have time to do anything other than automatically move it into my savings. I think this was on Monday (of this week). Then on Wednesday my ex-Manager phoned me and told me that there had been a huge error and overpayment. I said to him on the phone that I hadn't really looked at my bank account yet so I wasn't aware of it being that big. I asked him to ask HR to send me a breakdown of what I was supposed to have received and what they would want me to pay back. Initially they just sent me an email with the amount to repay. I wrote an email back saying that I'd like to see the breakdown before paying any monies back as this was a really big mistake, their mistake, and how can I be sure that what they are now asking for is correct. I also said in my email that I was very disappointed as I had believed the money to be mine and with the inconvenience of this communications and paying it back I believed they should compensate me in some way. They then sent me (today) a breakdown of how the severance should have been calculated and the mistaken tax code applied that threw the whole thing out. They also said that they didn't understand how I could have put aside money into savings when I hadn't seen the bank account until after speaking to my manager - which is a misunderstanding on their part, as I had moved the money to savings before speaking to my manager. They determined therefore that while they could see I was disappointed and there is inconvenience and that it is their fault, that I am not due any compensation. I am not trying to hold on to monies that are not mine - but this kind of enraged me because I worked there for over 17 years and I didn't appreciate going out on a note where I was subject to a major screw up and then feel like I'm the one who has to rectify it. And it has caused me both upset and stress, as I people I have talked to have all been saying that I should keep the money and it's their problem and making me feel like if I just pay it back without a fight, I'm doing the wrong thing. I consider myself a pretty honest person, so this feels a bit alien to me. I want to do the right thing - but at the same time, now I'm annoyed that they think its fine to have made this mistake and that I don't have any right to complain about it.

Thank you. 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.

I am not sure you would satisfy this because you have not changed your position, you merely transferred the money to savings. So overall I the employer was to pursue you for this money then they are likely to succeed in recovering it. In the end, errors do happen, as long as humans are involved in something there will be errors. You have not been greatly inconvenienced in the grand scheme of things here – you were paid money that was not yours, you quickly transferred it over to a different account and now are being asked to return it. The right (and legal) thing to do is return it and unless you have suffered any actual losses (not inconvenience as that is not compensated) , then you cannot ask for any compensation either

Customer reply replied 1 year ago.
OK - thank you. That's been my gut feeling all along. I am upset by it, but I don't feel like it's my money, so I haven't been comfortable finding myself in this position. I'd rather get it paid back and over with now. Appreciate your advice. Thank you.

You are welcome, all the best