Previous employer claiming back overpaid wages

[LB888]

Hi all,

Grateful for any help on the following matter, I've spoken with Citizens Advice but still feeling a bit scared and unsure!

I worked for my previous employer for 6 years, leaving the company at the end of October. I always had a good relationship with them and had several promotions, but they were relocating most of the staff to another part of the country and I needed job security.

I received a full wage at the end of October, and again at the end of November. I assumed this was my final pay, a month in lieu, and hadn't received anything from HR advising me what I was owed etc. I had emailed my resignation to my line manager and head of department in line with company policy.

I didn't receive any further pay from the company in December (which I didn't expect to receive), or a copy of my P45. I thought there was a delay in sending me this due to them having to wait until my last payment was made in November, so I contacted the company at the end of December to chase. I received a response at the beginning of January advising I had been overpaid for part of October and all of November, and now owed the company over £2,700.

I stupidly didn't respond to the initial email and subsequent chaser, which I know was bad, but I was so shocked I didn't know what to do. I did reply after the third chaser to explain that I believed the money was my wages that I was due and that I had spent the money. The company were demanding repayment within 7 days of the full amount.

Since then we have had several emails back and forth. I advised that I have £500 in a savings account from an inheritance that I could pay, however they refused this and requested the money repaid over 6 months. This amounts to over £450 a month which I just don't have.

As well as being extremely threatening in their emails, refusing to issue my p45 until I have repaid the amount and making continued threats to take me to Court they also advised that they identified the error mid December, but chose not to notify me until the beginning of January so as not to 'ruin my Christmas'. During this time I spent a lot of money on presents that I wouldn't have done if I had known about the issue. I'm so angry they delayed telling me for this period of time.

I then received another £400 at the end of January which I advised them of, believing it was another error on their part. They said they were aware it was being sent, however didn't tell me about it, and it was overpaid tax which they were unable to stop being processed. I explained that i could return this, with the original £500 I had offered, which they accepted and said I then needed to repay the remaining amount over a maximum of 12 months. This is still over £150 a month which I don't have, I'm re-mortgaging to purchase an additional share of my shared-ownership flat and it's using every penny I have.

I think we're now in the position where they are taking further action and taking me to Court, which I'm so upset about. I received what I believed was money owed to me, I replied upon this in good faith and spent it on items that I would not have usually purchased (including a holiday, repaying debt, helping family and purchasing Christmas presents), the company failed to notify me when the issue was identified and since then have failed to attempt to agree reasonable repayments. I'm absolutely petrified of this going to Court though and it potentially derailing my re-mortgaging.

If anyone has any advice I would be so grateful!

[R0b]

Just to be clear, what exactly did CAB say to you when you went for some advice?

Has your ex-employer actually issued proceedings or did they simply state their intention?

As far as I am aware, it is a legal requirement for your ex-employer to provide you with a P45. They cannot withhold that until you repay them the overpayments - In my view, they can simply issue the P45 without the overpayments added.

Have you returned the £400 to them?

[jaguarsuk]

You've done what most reasonable people would do and they are behaving like most companies do, unreasonably.

If you spent the money honestly believing it to be yours then a defence to the claim would be change of position citing Lipkin Gorman v Karpnale Ltd 1991 as case law. Your problem arises that you have paid £900 back and they will argue that if indeed you believed the monies to be yours why would you have repaid any. Your counter will have to be that it was a goodwill gesture given the relationship you enjoyed with them over the 6 years of employment.

You can press them about the P45, but in reality you can submit a P46 on starting new employment and so it's a pretty poor bargaining chip on their part.

I think you might be better explaining to them the situation, that even if they get a court judgement that won't change the reality that you can only afford to repay what you can repay and so it'll just be an expensive way of getting to exactly the same outcome. I'd advise them that costs are limited in the small claims court and therefore they'll only get back court fees and witness expenses, no other legal costs.

If they have a brain in their head they'll agree with you and come to an agreement that's affordable.

[LB888]

Just to be clear, what exactly did CAB say to you when you went for some advice?

Has your ex-employer actually issued proceedings or did they simply state their intention?

As far as I am aware, it is a legal requirement for your ex-employer to provide you with a P45. They cannot withhold that until you repay them the overpayments - In my view, they can simply issue the P45 without the overpayments added.

Have you returned the £400 to them?

CAB advised that they thought my previous employer were being unreasonable with their demands, and also that they had delayed telling me about the overpayment. They told me to explain that I couldn't make the repayments being demanded, which I did to no success.

No I haven't returned any money to them, after I offered the £400 plus £900 to settle the matter and they accepted and also demanded over £150 a month I thought it best not to return anything

[LB888]

You've done what most reasonable people would do and they are behaving like most companies do, unreasonably.

If you spent the money honestly believing it to be yours then a defence to the claim would be change of position citing Lipkin Gorman v Karpnale Ltd 1991 as case law. Your problem arises that you have paid £900 back and they will argue that if indeed you believed the monies to be yours why would you have repaid any. Your counter will have to be that it was a goodwill gesture given the relationship you enjoyed with them over the 6 years of employment.

You can press them about the P45, but in reality you can submit a P46 on starting new employment and so it's a pretty poor bargaining chip on their part.

I think you might be better explaining to them the situation, that even if they get a court judgement that won't change the reality that you can only afford to repay what you can repay and so it'll just be an expensive way of getting to exactly the same outcome. I'd advise them that costs are limited in the small claims court and therefore they'll only get back court fees and witness expenses, no other legal costs.

If they have a brain in their head they'll agree with you and come to an agreement that's affordable.

I feel like I've read every online article about this and some say about having a defence to the claim because of a change in position. When I spent the money I did believe it to be mine, otherwise there's no way I would have spent it. Now that I've been told it was an error I've tried to be reasonable and offer to repay part of it, because there's no way I can pay the full amount. I haven't sent the £900 to them because they also demanded over £150 a month for 12 months, which I cant pay.

What is the situation with a court judgement? Can it go in my favour or against me? If it's against me does that mean I'll have a CCJ on my record? If so all I can think is that I'll need to get a credit card to use to repay my ex employer and just be faced with repaying that plus interest, if I get a CCJ I won't be able to remortgage my flat.

[jaguarsuk]

It’s good you haven’t paid anything.*

So far they think they have the upper hand and you are on the back foot because they’ve threatened court, then you’ve tried to settle.*

I would go back to them and offer them to settle, but make it clear that you believed the money to be yours, they didn’t promptly inform you that it wasn’t, as a result you spent it as you had no reason to believe it wasn’t yours and that the offer to settle is a gesture of goodwill.

Inform them if they file a claim you will defend it citing Lipkin Gorman v Karpnale Ltd 1991 and that they should be aware that even if successful in the small claims track their costs are limited to the court fees plus witness expenses.

If they were successful in a claim then you would have a CCJ against you and it would be on your credit file if you did not settle it within 28 days from the date on the judgement. They stay on credit files for 6 years and yes that would scupper your re-mortgage.*

The idea is to never let this get to a court room ideally because despite what the law says some judges will just see it as it was their money and give it back.*

Claims can be settled or discontinued right up to the second one walks through the door to the court room, so initially pushing back doesn’t necessarily mean you’ll win or lose.*

This is your issue, so you have to decide how to proceed, but I had this issue personally a few years back and the company were as pig headed as yours is.*

When they realised I wasn’t scared of court, their hearing fee was due and that they would have to travel 100 miles to pursue this they discontinued. Mine was for near £800 though, so less than yours.*

It does mean that if you choose to push back at them I’ll be able to help you through the process, I still have my case files saved in the cloud.*

[LB888]

It’s good you haven’t paid anything.

So far they think they have the upper hand and you are on the back foot because they’ve threatened court, then you’ve tried to settle.

I would go back to them and offer them to settle, but make it clear that you believed the money to be yours, they didn’t promptly inform you that it wasn’t, as a result you spent it as you had no reason to believe it wasn’t yours and that the offer to settle is a gesture of goodwill.

Inform them if they file a claim you will defend it citing Lipkin Gorman v Karpnale Ltd 1991 and that they should be aware that even if successful in the small claims track their costs are limited to the court fees plus witness expenses.

If they were successful in a claim then you would have a CCJ against you and it would be on your credit file if you did not settle it within 28 days from the date on the judgement. They stay on credit files for 6 years and yes that would scupper your re-mortgage.

The idea is to never let this get to a court room ideally because despite what the law says some judges will just see it as it was their money and give it back.

Claims can be settled or discontinued right up to the second one walks through the door to the court room, so initially pushing back doesn’t necessarily mean you’ll win or lose.

This is your issue, so you have to decide how to proceed, but I had this issue personally a few years back and the company were as pig headed as yours is.

When they realised I wasn’t scared of court, their hearing fee was due and that they would have to travel 100 miles to pursue this they discontinued. Mine was for near £800 though, so less than yours.

It does mean that if you choose to push back at them I’ll be able to help you through the process, I still have my case files saved in the cloud.

This is really helpful thank you so much! I'll do as you've advised, go back to them to reiterate that I believed it to be mine, they failed to notify me when they became aware, and I spent the money because I had no reason not to think it was mine. Lipkin Gorman v Karpnale Ltd 1991 is one of the cases that I've found when I've been trying to do some research so I'll quote that too!

Fingers crossed they will reconsider and take no further action, I'll keep you updated!

[LB888]

Good news...my previous employer has decided not to take any further action so I can relax. Thanks for all your advice

[jaguarsuk]

Good news...my previous employer has decided not to take any further action so I can relax. Thanks for all your advice

That is indeed good news, good luck with the re-mortgage and you know where we are if anything legal ever pops up again.