If an employer have overpaid your wages can they take disciplinary action?

Question

my employer has adv that i have been overpaid for yr in my wages i hadn't noticed and had no reason to think my wages where incorrect now they want to take disciplinary action. whats my rights?

Answer 1

They may have a case for getting the excess back but - I cannot see how they can take disciplinary action unless you behaved fraudulently in some way to attract the overpayment

Answer 2

thanks for every bodies response. what i hadn't said is it was a new role within the company they hadn't paid me correctly for over 4mths. It isn't a huge amount and there is quite a few employees they are taking action against. I feel this is the incompetence of the company not my error and my wages haven't altered much since taking the new job. I think it is a disciplinary as they adv a disciplinary hearing. What i also failed to mention is we have been taken over the last 2mth and it is the new company taking action. I've been paying into a pension for past 2yrs and the trustee contacted me and adv they couldn't find where my monies has been going. I am in the union and they are not happy with the way the new company have treated staff. I didn't even get a letter to state i had been overpaid and an opportunity to offer repayment, they called me in on my day off (which not happy with) for an informal meeting to arrange a new disciplinary hearing which they wanted to hold whilst i was on holiday. This not about the money i will pay them back if i have too, it is their treatment of their staff that I'm angry about.

Answer 3

The normal rule is that an employer may not deduct anything except PAYE, NIC's and agreed amounts from an employee's pay. There is however, a statutory exception for deductions to reimburse the employer for overpayment of wages or expenses. A case came before the Court of Appeal in November 2003 in which an employer had deducted £250,000, no less, from a young city banker's pay on the grounds that it overpaid that amount by mistake in an earlier bonus payment. The High Court found for the young man. The Court of Appeal disagreed and found for the bank. The decision is essential reading for any employer considering docking money from an employee's pay packet.

If an employer uses disciplanary action to recover money (unless there is clear evidence of dishonesty) then they will find themselves defending a claim for both constructive dismissal and substantial damages.

There is a defence to a claim of unjust enrichment (overpaid salary) called "anticipatory reliance".

The general rule is that where an employer has overpaid an employee by mistake the question of whether the employee can be relieved of the obligation to repay that money (which of course he must normally do) should take into account "anticipatory reliance" that it, if the employee has acted in reliance on the increased salary in good faith in the expectation of receiving such payments in the future. It will be disproportinate, in some cases, to reduce a persons income (to what it should have been) and reduce it yet further by asking him to repay the overpayment.

That is, however, a matter between you and your HR department. However, disciplinary procedures should not be tolerated. Get advice from an employment specialist before you do anything (or attend, or discuss any disciplinary matters).

Answer 4

Hi Christina,

I cannot see that this is a disciplinary matter unless they think you were dishonest in some way. If this is a payroll dept error you cannot be held responsible for the negligence of another employee in this type of case.

They do have the right to ask for the overpayment to be returned.

The company have to show that you acted dishonestly in some way by proving that either;
you knew of the overpayment
or
you should reasonably have known.

Also that as a result of this act or omission you were dishonest. This would be a breach of mutual trust and confidence of your contract of employment at common law. It could also be viewed as theft but it would take a lot to prove that in this case.

This type of thing normally happens when high expenses are claimed or too many hours have been booked by an employee. Not for an error in the payroll dept unless it is blatantly obvious i.e they have paid you £1200 instead of the normal £200 for a weeks work.

Provided you have not been deliberately dishonest your employer will have a hard time giving you a disciplinary or dismissing you. You will probably have to repay the money though.

Talk to your union rep or go to the CAB and talk to an employment law specialist.

Answer 5

I agree that they have the right to ask for the money back. However, everyone is misinterpreting the meaning of disciplinary action. If you refuse to repay the money to them, and they can't negotiate with you, the only way they can force repayment, short of taking legal action, is to go through a formal disciplinary procedure - this is set down in UK employment law as a way of settling disputes. It does not necessarily mean they are going to discipline you! (For instance, if they needed to terminate your contract, they would have to go through this procedure, even if you knew you were on a fixed term contract. Its just put into law, so that everyone knows where they are and its to stop employers just sacking people on the spot.) I would suggest you could, in turn, invoke the grievance procedure to them!
See www.acas.gov.uk and ring their helpline if you can't see what you need. They are v helpful.

Answer 6

You do have to pay the money back. If they underpaid you, you'd want what they owed you: just the same when they overpay you. It's your responsibility to check that what they're paying you is the right amount. Even if things like tax and NI contributions fluctuate, your pay slips will still show you annual gross salary, so you should be able to see it's higher than it should have been. You've probably had some interest on the overpaid money too.

Answer 7

I suspect your not in any sort of Union or you wouldn't be asking this question here. Your question says this payment was for a year?
Can I assume that in a year you might have glanced at your pay check stub? I can reasonable assert that they have been writing your paycheck and have known it's calculations.
If your discrepancy in the total income is based on the hourly rate you've been making , I would think that repayment would be something your employer would have to eat ....they did in fact know what they were paying you.
However, if the mistake is based on faulty input of the amount of hours you actually worked ... that might possibly have another outcome, esp. if you inaccurately reported your time.
In that case, it's called fraud and embezzlement......

Answer 8

Disciplinary action means that you are being reprimanded for something that is YOUR fault. This is their fault, and I believe you may be using disciplinary in the wrong context.

Either way - there is no way they can discipline you, but they certainly have the right to collect the money back, based on your contract. It would have been easier for you, if you'd spotted the error, and stopped it before this happened, but because you did not, it will probably cost you, sorry to say ...

Answer 9

Yes, your employer can take action. You generally are expected to report errors like that right away. Many people don't, because why would you report something that works in your favor (especially monetarily) right? Except in an employer's eyes that makes you seem dishonest.

It's sort of like when the IRS gives you too large of a tax refund (in essence, giving you "free money"). You are actually expected by the government to pay back the excess upon request. If you can't, then you've technically "stolen" from the government.

Answer 10

The error is theres so they cannot take disciplinary action because your behaviour is not the problem...it is their actions.

An employer may take reasonable steps to recover overpayments of this nature but they must be reasonable.

If you were a member of a trade union you would be in a position to deal with this.....hey ho!!!....