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In today’s post we’re going to take a brief look at claims for overpayments of wages and how an employee can potentially seek to defend themselves against such a claim. We’ll do so by examining the following elements:

  1. When may your employer try to claim that you’ve been overpaid?
  2. How can you defend yourself against a claim for overpayment of wages?
  3. What should you do if you’re subject to a claim for overpayment of wages?

When may your employer try to claim that you’ve been overpaid?

Normally there’s an obvious answer to this question – your employer will try to claim that you’ve been overpaid if you have in fact been overpaid. Overpayments can happen for a variety of reasons but they’re normally attributable to administrative errors on the part of your employer. This leads to the employee being overpaid (potentially by thousands of pounds a month) and your employer – once the mistake has been discovered (which can often take a while) – will normally attempt to recover the whole or part of the overpayment. However, if there is potential litigation in the offing (say, for example, the employee is considering a claim for unfair dismissal in the Employment Tribunal) then the employer may sometimes make allegations relating to overpayments in order to try to encourage the employee to settle their claim(s).

In order to show that you have been overpaid your employer should provide evidence. This evidence will normally come in the form of documentary evidence – payslips of what you’ve been paid in comparison with what they were contractually obliged to pay you. If there is a discrepancy between these two figures then your employer may have a credible claim for overpayment of wages.

How can you defend yourself against a claim for overpayment of wages?

There are three potential lines of defence to a claim for overpayment of wages:

  1. The “limitation” defence
  2. The “statutory” defence
  3. The “common law” defence

The “limitation” defence

A claim for overpayment of wages is a contractual claim. Claims in contract law must be made within six years of the alleged breach of contract occurring. If a claim is made more than six years after the relevant date then the claim would be “out of time” unless the Judge chose to exercise their discretion and extend the limitation date (this is normally done if it is just and equitable to do so).

The “statutory” defence

If the employee thinks that their employer has unfairly deducted sums from their wages then they can make a claim to the Employment Tribunal for recovery of these sums. However, there is a complete bar to bringing such proceedings if the reason for the deduction of the sums was a previous overpayment by the employer.

The “common law” defence

The common law defence is normally the strongest line of defence for an employee and is based on the law relating to restitution. A person can use this defence against the claim for overpayment of wages (generally) if they satisfy the following conditions:

  1. The person “changed their position” in response to the overpayment i.e. they changed the budgeting needs to account for the increased payments; and
  2. The person’s change of position was not due to their own mistake or misunderstanding; and
  3. The overpayment was not the fault of the person and that they reasonably brought it to the attention of their employer

What should you do if you’re subject to a claim for overpayment of wages?

If you’re subject to a claim for overpayment of wages then you should seek to obtain advice from employment law solicitors as soon as possible. Such claims can be financially burdensome and it’s important that you obtain the best advice possible.

Redmans Solicitors are employment solicitors and settlement agreement solicitors

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About

Redmans Employment Team deal with employment matters for both employers and employees, including drafting employment contracts and policies, advising employers and employees on compromise agreements, handling day-to-day HR issues, advising on restructures, and handling Employment Tribunal cases for both employers and employees Call 020 3397 3603 to speak to one of the members of our employment team or email us on enquiries@redmans.co.uk. Redmans have offices in Richmond, Chiswick, Hammersmith, Fulham, Kingston, Wimbledon, Ealing, Kings Cross and Marylebone (meetings strictly by appointment only).

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