Estoppel and overpayment of wages from ex-employer

[Chachatipu]

Hello,


This is a question on behalf of my nephew and is related to overpayment of wages.


Less than 3 years ago he quit his job and emigrated. He left his bank account, mobile phone account, loans etc in the hands of his family so that they could run them. He also still contributed to the running of the family home.


6 months later he returned to the UK as he found he could not make his life overseas.


Upon taking control of all his accounts he noticed that he was still being paid by his old employer. He immediately contacted them and the wages were stopped. His family were unaware of the erroneous payments and had spent all the money paying his loans, family bills and house repairs. Six months later the ex-employer asked for a return of the overpaid wages. My nephew was still without a job and was now in greater debt. He advised the ex-employer that he was unable to repay and that he believed that Estoppel applied. He heard nothing more.


Then 18 months later the ex-employer contacted him again demanding the money. My nephew again explained his situation and said he believed he did not have to pay because of Estoppel. The ex-employer has now given him 7 days to pay and threatened court action.


My nephew now has a job but is still paying off debts..


Where does he stand with regards the overpayment and does Estoppel apply?

[R0b]

Re: Estoppel and overpayment of wages from ex-employer

What his ex-employer will be claiming is restitution by way of unjust enrichment. There is a criteria which must be proved before a Court will allow the recovery of overpayments:

1. The Defendant has received a form of benefit from the Claimant
2. The benefit received is unjust
3. the enrichment of the Defendant was at the expense of the Claimant

There is a primary defence to unjust enrichment which is the change of position, where your nephew can show that he has changed his position for the worst as a result of the enrichment. Usually this requires him to show his position has changed detrimentally which were caused by the unjust enrichment and there is no reason why he cannot rely on the defence.

Ordinarily, paying off debts would not amount to a change of position (except rare circumstances), this is because you are effectively paying off one debt with another and therefore will not necessarily be worse off than you already are. The rare circumstances might be where you have paid off a low interest rate loan which means you may not be able to borrow again at that same low interest rate. Evidentially, your nephew needs to show that he wil lbe worse off if he has to repay the amount in full.

Arguably, aside from the mortgage repayments, he could say that other uses of the money could be a change of position.

Not sure estoppel works in this case and although there are various types of estoppel, you are probably thinking of promissory estoppel but that will require some kind of representation made to him. It doesn't seem like it in this case just that they have continued to pay him following the end of his employment.

[Chachatipu]

Re: Estoppel and overpayment of wages from ex-employer

Thank you, R0b.

Not sure he will be able to get too far with the 'change of position' due to the things the family spent the money on (he didn't spend it).

Hopefully the company will accept £5 per week and clear the repayment in 24 years

[R0b]

Re: Estoppel and overpayment of wages from ex-employer

Well it depends on what he spent it on, if for example it was spent on things that he would not have ordinarily spent on had he not had the income, then that could amount to a change of position.

[Chachatipu]

Re: Estoppel and overpayment of wages from ex-employer

Ah, thank you again, R0b,

The family did have a conservatory built partly using funds from my nephew's account.

I will tell him to get the receipt and hopefully the dates will tie up with the withdrawals from his bank account.

If/When this goes to court and if he loses, will this be marked as a judgement against him and consequently reduce his chances of a future mortgage?