Overpaid for about 10 months by my employer

[Guest]

Hello,

Apologies for the long post...

I was overpaid for about 10 months, from about Sept 2019, by my employer (a significant amount, about 1,250 per month). I'm used to varying amounts of pay, so it wasn't unusual for my pay to fluctuate by fairly large amounts. The overpayments came as holiday payments. At some point my employer changed how they do holiday pay and provided no details (beyond a vague description) of how it is calculated. A few months into 2020, I looked at my payslips in more depth (previously just checked the high level overview and that my overtime, on-call, etc, were correct) and I noticed the holiday payments were very high. I didn't know for sure it was right, but it felt wrong. However, I was also aware from their vague description that this payment could vary too as it was based on an average of on-call, overtime and other mystery payments. I had done a lot of on-call and overtime, but still... I thought I should get this checked.

So, I raised a case asking for the formula. It was closed with the vague description, but I was given the chance to challenge the response. I type in my response and then in my haste clicked the agree button, rather than reject... which I didn't notice at the time.

A few months later, when the issue came to mind again, I checked the case and realised my mistake, so I opened a new case. This time they contacted me directly (as I had opened two cases) and tried giving me the standard response again. I challenged this, gave an example and they assured me it was correct. I challenged their assurance, asked for it to be verified and they said they would have it verified. The next day my case was closed and they claimed it had been verified by payroll and my pay was accurate. Wow... amazing! I didn't know what else to do. I had no way to independently calculate it and the "experts" (payroll processing team) confirmed it as accurate. So I just had to take their word for it. At this point, I stopped feeling stressed and started to relax more.

Anyway, about six months after they "verified" it as "accurate" I received an email from them asking for the money back. It was quite a shock, to say the least, especially after they confirmed it was accurate. It taught me a lesson: don't trust anything from them that I can't independently verify.

I think I have been able to identify how the overpayments happened: I realised that the start of the higher holiday payments coincided with me raising a case to have an issue with my time off units fixed: when I was requesting time off it was 8 hours for a day instead of 7.5, which meant I was losing time and couldn't even properly submit my leave. They closed the case with a note that a change had been made to my "work shift". Not particularly informative, but it is the HR service we had become used to for years now: cryptic and remote. I believe that whatever they did triggered the higher holiday payments. Too much of a coincidence in terms of dates.

Especially as the higher holiday pay stopped during the same month I raised another case: the issue was slightly similar, but not the same. Although I could now put in 7.5 hours the default for me was 8. Another amendment was made was made and my default was 7.5. No more higher holiday pay. Such a coincidence.

I have a few questions:

1. The overpayments cross two tax years, so I don't know how to handle this in terms of repayments/calculating repayments. Also they are asking for the gross amount back. Any advice on this?
2. Are companies obliged to detail how they calculate pay? I would like them to provide the formula and a working example for how they calculate holiday payments so that I can independently verify it.
3. It annoys me, to say the least, that the issue was most likely caused by their mistake and additionally their lack of transparency about how holiday pay is calculated and the fact they verified it as accurate. Would it be unreasonable for me to ask them to reduce the amount they are demanding back?

Cheers,

Howdon

[ULA]

In answer to your questions:

1. I am not sure of the tax implications over two tax years. My understanding is that since it would be the gross amount that was overpaid that is the calculation for the repayment as being PAYE the tax/ni contributions should right themselves when the gross deduction is made.
2. There is very clear quidance on what is included in holiday pay calculations and over what reference period (which did change in April this year from a 12 week reference period to a 52 week period) so the company should be able to provide you with details of how they have made the calculations in your case.
3. An employer is permitted to recover the overpayment of wages. When you raised the issue and they verfied you were being paid correctly did you get this in writing. If so then I would suggest that you have a discussion with them about the amount of the repayment and see if they can make some consideration of this fact.

[des8]

Could Howdon not claim that the contract has been varied?
After all the increase was queried and has gone on for a substantial period
Possibly use ACAS for conciliation purposes

[Manxman]

You will have been overpaid a gross amount but will only have received a net amount. You will have to repay*** the gross amount but will only actually repay the net amount because the payroll system will automatically credit back to you tax and NI etc. Do you follow? (That is assuming that any recovery of the overpayment is made via your employer's payroll system and you don't do anything stupid like agreeing to repay outside the payroll system.) You need to ask your employer for a breakdown and calculation of the overpayment - both gross and net.

The overpayment being over two tax years may be a complication. I think any adjustments will simply be treated as being made in the tax year in which they are made. This may be to your advantage or it may not.


*** I say you "will have to repay" it, but you may have an argument depending on exactly what you asked them when they checked your query, and exactly what they told you. Did you ask them twice and did they twice tell you that your pay was correct? I'd be distinctly unhappy if I'd twice queried my pay and been told it was correct, only to be told a year later that it was wrong.

Hopefully you are in a union. Ask your union for assistance.

If not, how much are we talking about? Over £10k? See what other advice you get here, but it may be worth talking to a solicitor for that amount.

At the very least (ie worst case for you) you ough to be able to insist on repaying any amount over the same period of time (ten months) as the original overpayment.