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If your employer is stating that you’ve been overpaid wages and is trying to recover these from you then you have a number of options open to you to defend such an action. In this post we’ll take a look at the following issues:

  1. The definition of wages
  2. When is an employee overpaid?
  3. When can your employer try and recover overpayments?
  4. What options are open to employees if their employer tries to recover overpayments?

The definition of wages

The definition of wages is a wide one. It includes any sums payable to the worker by their employer in connection with their employment, including salary, bonus, commission, company car (if for business use), living allowance, and so on. What the extent and value of wages are in any instance is particular to the facts of the situation.

When is an employee overpaid?

Overpayments normally occur because of an administrative mistake on the behalf of the employer. The employee is either paid a one-off payment which is in excess of the sum that they should have received under their contract of employment or they receive multiple (possibly regular) payments which are in excess of the sums that they should have received. Again, whether an employee has been overpaid and the extent of the overpayment is particular to the facts of the individual situation.

When can an employer try and recover overpayments?

An employer can try and recover sums from an employee if there has in fact been an overpayment. Whether an overpayment has occurred is a situation which is often in dispute and is something that employees can seek to contest. Should there be a genuine dispute about whether an overpayment of wages has occurred then the employee is entitled to submit a claim to the Employment Tribunal under UK employment law. Should there not be a dispute about whether an overpayment of wages has occurred then the employee is not entitled to submit a claim to the Employment Tribunal but may submit take their complaint to the County Court (or High Court, depending upon the value of the overpayment and the complexity of the matter).

What options are open to employees if their employer tries to recover overpayments?

An employee has a number of options open to defend an action for repayment of wages by their employer. They may assert that there has not in fact been an overpayment. However, it is often clear on the facts whether there has been an overpayment and employers are normally not keen to demoralise employees by pursuing actions for overpayment if there has not in fact been an overpayment!

There are three main “defences” open to employees if their employer is claiming that there has been an overpayment of wages:

  1. A statutory defence under the Employment Rights Act 1996
  2. A common law defence under the law of restitution
  3. A defence based upon the Limitation Act 1980

About Chris Hadrill

Chris is a specialist employment lawyer at Redmans. He specialises in contentious and non-contentious employment matters, including breach of contract claims, compromise agreements and Employment Tribunal cases. He writes on employment law matters on a variety of websites, including Direct 2 Lawyers, Lawontheweb.co.uk, LegalVoice, the Justice Gap and his own blog. Contact Chris by emailing him at chadrill@redmans.co.uk

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