Overpaid wages at previous employer

[twig04]

Hello everyone,

I'm having a bit of a problem with my previous employer and I was wondering if anyone would be able to help me.

My previous employer overpaid me for 10 of the 12 months that I had been employed there.

The previous employer explained that this issue was due to there being a higher first month payment because I had worked over a month on the first month I was due to be paid. This came to a net total overpaid of around £1600.

Neither I or my employer had noticed this until I was due to leave the company. At this point my previous employer drafted a payment scheme of around £270 for 10 months. This was incorrect as it was the gross amount and was later adjusted by my employer to the net amount £160 a month to pay the amount back in 10 months.

I had made one payment through direct bank transfer and to my previous employers account but had missed the subsequent payment due to an error in my standing order. When this had happened I received a letter from my employer informing me that I must pay within 7 days or I will be taken to court.

I apologised for the mistake and asked if the amount could be amended to £50 a month as £160 was too difficult for me to pay every month. I paid another £100 to cover the previous and present month.

My employer refused payments of £50 but amended to around £135 for another 10 months payment.

At this point I am unsure what to do as I have paid another £50 while seeking advice, but my previous employer has now sent me another letter threatening to take me to court within 7 days if the difference of £85 is not paid.

Would you be able to advise me where I stand on this issue? I am making payments and I do not dispute that this amount is owed, but I want to do it at a rate that is affordable to me without hardship.

I have also been looking around the internet and came across the concept of estoppell. Is this in any way relevant to my situation? Although I didn't notice the amount and query it at the time, I did move out of my parents house in to a flat of my own and have spent the money or I would have repaid in full! Though I do want to pay this whole amount back as it is money that isn't mine.

Any advice would be greatly appreciated.

[CLL1]

Re: Overpaid wages at previous employer

I had drafted a letter for a friend similar to your situation. These were the contents:

Change of Position

I am unable to afford to repay the debt in full or at all due to my financial circumstances. Once the payment of wages (which at the time, was not under issue) had been received, due to personal circumstances with my family, the vast majority of the money I was paid was used to financially assist my close family. Accordingly, I am advised that a “change of position” defence is applicable to this situation, and that it would be unjust to expect me to repay the sums that you say are due to you (see Lipkin Gorman v Karpnale [1991] 2 AC 548).

Unfortunately, due to the delay between my employment ending (November) and your notification of the overpayment (received early January 2016), the sums had already been spent. In Vaught v Tell Sell UK Ltd [2005] EWHC 2404 (QB), the High Court clarified the “change of position defence”, and said that, “…the question was simply whether, in all the circumstances, it would be inequitable to require him to repay the sum, either wholly or in part.” The resources now available to me are therefore an important factor to consider, though you appear to have disregarded this in your communication.

Estoppel

I am further advised that you may be estopped from claiming the sums that you say are due to you. In the circumstances, your representation that I will “…be paid [my] normal salary up to the date of the termination of [my] employment, together with a sum in respect of accrued but untaken annual leave entitlement, if applicable…” in your letter dated 4 January 2016 led me to believe that the sums you had paid me were, as stated in your letter, my final salary, together with accrued but untaken annual leave. This letter did not particularise what the sum might be, and so there was no reason to suggest at the time that I had been overpaid. The sums were spent without receiving notice that there had been an error (your letter of 6 January 2016 confirming that all was as it should be), and the circumstances show that the overpayment was not my fault, either primarily or at all.

In the circumstances, I am advised by my lawyer that it would be unjust to expect me to repay the sums to you which you saw I owe, in circumstances where your error caused the alleged overpayment, and without notice of the error by you, that sum was spent by me on the basis that I was owed that sum, as per your letter of 4 January 2016.

[twig04]

Re: Overpaid wages at previous employer

Thanks for your reply CLL1.

I'm just wondering, would the estoppel/change of position defense be applicable in my situation?

The over payment was discovered 2 weeks before the end of my notice period, however I did move out of my parents house after a couple of months of employment at that job.

The contract doesn't say anything about over payment of wages, but for some other sections it refers to a handbook that was never issued to me or my previous coworkers.

Of course the employer is entitled to recovery, but I just don't want to be forced to make higher payments when I cannot afford them.