overpayment

[chrisb89]

Hi
not sure where to post but here goes basically i have been overpaid by my employer due to the fact my hours and shift changed, but i still remained on the same rate and shift pay and was only deducted my reduced hours. my payslip is quite complicated to understand it doesnt give the hourly rate and always had some kind of adjustment for reduced hours etc. the total amount overpaid come to nearly £3000 . the problem now is that is has affected our working tax credits. and my employer wont deduct it from my gross they are making me pay it back as a loan. they have wriiten a letter to explain to the tax credits people but they wont accept as it doesnt affect my gross pay. so basically our income is down by £3000 is there anything my employer or the tax credits people can do? Thanks

[miliitant]

Re: overpayment

what area of employment are you inn may i ask

paying back as a loan is a no,no

they cant take more that 10 % of your earnings each week paying back the loan, they cant even do that if the deduction takes you below the national minimum wage

the repayment needs to come off your salary gross prior to any deductions and be recorded as a seperate deduction

that is why i asked what area of employment are you inn with a rough amount of employees

[teaboy2]

Re: overpayment

On top of what Militant said, they can not take back more than the amount paid in over payments. They can only make weekly/monthly deductions. Also your working tax credits is based on what you earnt last tax year not on what your currently earning. Hence why its now effecting your Tax credits. The employer made the mistake, therefore they are liable for any lose in tax credits you incur and as such those losses should be deducted from the total overpayment, and what is left is all you would have to repay.

[chrisb89]

Re: overpayment

Hi Thanks for the replies
I work for a well known catalogue merchant that is part of the home retail group. The area i work is in warehousing. the overpayment is from last year so it spans over two tax years February to November. I am paid monthly and currently paying £50 per month back as a loan. According to the company they cant deduct it from gross.
Chris

[teaboy2]

Re: overpayment

Yes they can, they should make deductions from your gross pay, its illegal to treat it as loan when it is not, as a loan would have to be under a regulated agreement complying with the consumer credit act 1974.

[bluebottle]

Re: overpayment

I am in total agreement with Teaboy. Your employers cannot treat an overpayment of salary as a loan - it is illegal for them to do so and amounts to False Accounting as well as breaching Financial Law. As suggested, calculate the Tax Credits you have lost as a result of your employer's incompetence, deduct from the overpayment amount and that is what you have to repay. If your employer doesn't like it, give HMRC a call.

[chrisb89]

Re: overpayment

Hi
Thanks for all the replies. I had another meeting with the company today and basically they still wont budge.
they have issued me with a letter that I can forward to the tax credits people which reads

" Dear Chris
As requested please find the details of the overpayment made to you and subsequent repayment plan.

There was a total accumulated overpayment of £2885.19 which was converted to a loan of £2402.36 in January this year. The difference is because this amount was refunded to correct your tax and NI (see your January payslip which shows the detail including a tax refund) and only the net amount was set up as a loan to be repaid at £50 per month.

I hope this makes the situation clear.
yours sincerely HR assistant"

not quite sure what to do now as this still leaves us £2402.36 out of pocket for this financial year

Chris

[teaboy2]

Re: overpayment

Inform them that it is illegal to change an overpayment into a loan. A loan must be regulated by the consumer credit act 1974 and a loan agreement in prescribed form signed by both debtor and creditor. The creditor (in this case employer) is also required by law to hold a consumer credit license in order to act as a creditor.

Now big question Chris are they apply interest to the amount still owed?

I think what they are doing since they are Home Retail Group, they think they can create a loan agreement for you to repay the overpayment as though you were a customer who purchased a sofa on credit.

Ask them for a certified copy of the original signed loan agreement signed by you. Because without one then they can not treat it as a loan, though they can not change an overpayment of wages into a loan either. so either way they are in trouble.

[chrisb89]

Re: overpayment

hi
no they aren't applying interest. I've contacted HMRC and ACAS both who say they cant advise me. Acas say benifits falls outside their remit, but regarding the overpayment according to acas the company can claw the overpaid amount without even notifying me but they did tell me to try the DWP or try to appeal the benefits decision.

Chris

[dogtired]

Re: overpayment

An ex employer did that to me when I reduced my hours but took it back as a lump sum left there about two years ago though

[bluebottle]

Re: overpayment

Again, I am in full and total agreement with Teaboy. It is illegal for an employer to turn an overpayment of salary into a loan. Which department/division within HMRC did you speak to when you rang them?

[chrisb89]

Re: overpayment

Hi Bluebottle
I spoke to the income tax section within HMRC? I'm on holiday next week so might pay a visit to CAB and get help with writing an appeal letter and a letter to my employers. I really dont know what to say and everyone I ring appears to be passing the buck. Thanks.

Chris

[miliitant]

Re: overpayment

i am of the opinion that not only converting this overpayment to a loan, then dedctions as a loan will be in contravention of section 13 employment rights act as unlawful deduction of wages as their is no statute provision allowing them to do it

comments on that people as its just my opinion

[bluebottle]

Re: overpayment

I agree with you, Militant, as well as with Teaboy.

Chris, the Income Tax Department within HMRC deals solely with individual taxation. Another division deals with employers and PAYE schemes. If they've overpaid you, that means you have overpaid the Income Tax and National Insurance Contributions relating to it. I have to admit that your employers are going about recovering the overpayment in a ham-fisted and clumsy manner. The suggestion that you contact DWP is a sound one. Also sound is your proposed visit to CAB. Your employers need to sort this mess out and quickly.

[teaboy2]

Re: overpayment

Just a quick question. i probably should have asked this earlier, but never thought to ask. But did they say catagorically that its a loan or have they classed it as a wage advance? Because if they are not charging interest then it sounds more like a wage advance, though still they can only take back what you can afford to reasonable pay each week/month and still as it was their fault reimburse you for any financial deteriment it has caused you such as it effecting the amount of tax credit your entitled too.

I agree acas can not deal in benefit issues but they should have been able to advise on the way the company is trying to claw back the overpayment as that is an employment matter (which is what Acas is therefore "Rollseyes")

If they are treating it as an Wage advance then, although i agree with militants arguement regarding use of Section 13, it would not whoever apply if it is being treated as a wage advance. Which if they are not adding interest to it, then it appears they are treating it as a wage advance and simply have failed to be clear on that by mistakenly referring to it as a loan.

Also how long were they paying you more than what they should have been paying you? Depending on your answer then we may have custom and historic practice to claim the overpayment as a wage increase (which would make the level of wage you were being paid your contractual wage) and use the law of estoppel to prevent them reclaiming it. Though i must point out its only theoritical, based on other situations in employment were it has been applied successfully or argued successfully. But i see no reason why it would not apply to this situation either.