Alleged Overpayment of Allowances

[daveginboav]

I will try and be brief.

 

In August 2010 a number of us had some deductions made from our salaries only for a compensating amount to be paid back within the same pay statement. Shortly afterwards, we all received letters alleging overpayments of allowances stretching back many years. Many thousands of £ are involved.

 

The letters were not specific regarding which of 3 criteria were allegedly not being satisfied in order to justify payment of the allowance. The allowances were also stopped being paid immediately.

 

We all responded in a similar way, refuting the allegations and asking for further details to which we received no responses.

 

I should state here that none of the employees ever submitted a formal written claim for this allowance. Over the years the process has changed a number of times, but very broadly the Line manager submitted a case for payment of the allowance.

 

In early December 2010, having not heard anything about our refuted allegation and worried that we may miss any chances of airing grievances over the issue itself and the handling of it we raised the appropriate forms, sent to HR, and received acknowledgements back within days. The grievance procedure states that we should be offered interviews by the investigating officer within 2 weeks of receipt. The employer is being very quiet about all this and we think are stalling.

 

We think this may all go back to one single case which was submitted to the pay office many years ago. At that time the criteria was a little ambiguous. It would appear that some correspondence took place between the pay office and a senior line manager, and it was agreed that the allowance should be paid. We suspect other subsequent cases relied upon that precedent.

 

In my own case, many years ago I was told by my Line manager some good news and bad news. The good news was that I was going to receive the allowance; the bad news was that it was not going to be backdated!

 

My view is that these alleged overpayments cannot be recovered on the basis of a review of the criteria and then applied retrospectively. These payments were not mistakes of fact but, a mistake of judgement or interpretation of the criteria. It seems unfair that such alleged overpayments can be recovered. But is the recovery unfair in legal terms?

 

What can we do now if the employer is dragging his heels over all this? Some of us cannot take the stress of all this as much as the others with the threat of having to pay back many thousands of pounds.

 

Hopefully, I have included only the most relevant of facts and tried to be as objective as possible. I have omitted much of the emotional details of the responses made, and the whole questioning of the interpretation of the criteria and seeking evidence of criteria being the same over the years. All of this sort of thing was just knee-jerk defensive posturing at the time of the refuted statements; understandable at the time but not necessary to dwell on here.

 

Does anyone agree that these overpayments have to be repaid in accordance with the law? If so, what is a reasonable amount and over what period? Suffice to say we don't think we should pay any back.

 

All interest, advice and comments warmly thanked for in advance.

[honeybee13]

Hello and welcome to the forum. I hope we can help.

 

In case it's relevant, are you able to tell us what the allowance was for please?

 

My best, HB

[SarEl]

Oh God - I hate these types of posts. Legally, if the employer can evidence that an overpayment has been made then the amount must be repaid. Sorry. But it does mean that they have to evidence it with full breakdowns of the alleged overpayment. Why is happened - a mistake - isn't relevant. And they can reclaim for a maximum of six years back. The amount of any proven overpayment can be paid back at whatever mutually agreed rate (or not agreed in the case of enforced repayment - then the employer may technically deduct from wages any amount over the NMW - although few would go that far).

 

You should certainly persue the grievance - if the money is owed (and I am not saying it is - that has to be evidenced) - because the employer does not have to recover the amount, or the full amount, and may be willing to drop it or negotiate. But I am afraid there is nothing in law to protect you if the money can be shown to be owed. Especially not if you remain in work. It's hard to give any more advice without an explanation of the alleged overpayments which presumably will be provided as an outcome of the grievance?

[daveginboav]

Many thanks for the very quick response.

 

From my own researches SarEI you have not shocked or surprised me. Although, I did pin some hopes on the "mistake in fact"/"mistake in law" argument based upon some case I found elsewhere. (Don't have the details to hand just now, but will post tomorrow.)

 

Can I follow up though please on some of your other points? You stated that they had to provide evidence of the overpayment. We have taken extreme care to refute any overpayment - always using the word "alleged" where appropriate - just to take care that we never admitted to the overpayment - scared that any admission would be used as evidence! One of our defences has been that the criteria currently being cited is different from the criteria being used at the time of the first payments. The problem is we are having difficulty producing our own evidence to that effect, relying so far solely on our collective memories and a bit of logic (possibly flawed). The employer also it would seem has had extreme difficulty with its own record keeping and has not produced so far any evidence regarding the precise nature of the criteria in use at the time. We think all the old records were destroyed during the move from one computer and manual records system to another. It would also seem that our collective memory is far superior to the corporate memory and far superior to the newer HR staff! Am I right in saying that if they cannot produce any written evidence of the criteria in force during each monthly payment then they must drop the case? Where within the law system would this be done, ET or small claims court?

 

If it does come down to repaying would you say that repayment over the same period in which it was paid would be fair? You mentioned 6 years - presumably statute of limitation - in this case many of the payments go way beyond this.

 

You mentioned "especially not if you remain in work". Now don't temp me!!! I assume you mean with the same employer. As redundancy and indeed simply resigning is a distinct possibility, could it be argued that this is likely to thwart recovery? Would resignation in such circumstances be subsequently construed as constructive dismissal?

 

I forgot to mention that we have evidence that employees who also received the allowance over the years but were not in receipt of the allowance in August 2010 have not been pursued similarly. There is also a faint chance that ex-employees may have enjoyed similar alleged overpayment of allowances and we suspect the employer has not pursued them either. (reason - simply because they do not have a clue on how to enquire properly of the computer system!) Are these revelations pertinent and relevant?

 

I also forgot to mention whether in law there is any difference between "salary/wages" and "allowances". The allowance was paid monthly from what I can gather is a matter of convenience. Just how many times can the same mistake be made? Sorry, that last bit is rhetorical - I do accept your point (not totally yet ) that a mistake is a mistake! I don't want to mention the nature of the allowance just yet as I don't think it is really relevant but i will say that it is skilled based and one of the three criteria is that the skill must be utilised 100% of the time. You will see how difficult this can be to "evidence" either way both before and after the event.

 

Once again thanks again in advance of any help. It really is appreciated.

[SarEl]

Going backwards (sort of) - no, there is no difference between salary and allowances If you owe the money, you owe it - this isn't employment law, it is the law of debt. I am afraid that mistakes can be made every months for ever - but they can only be claimed every month for six years backwards. And I am afraid that "mistake" in law, is just that - a mistake and enforceable. If the same mistake applies to ex- employees then the mistake still matters. The fact that they cannot pursue them does not make it any less an mistake or any less reclaimable. It is just as reclaimable against ex-employees. I am afraid you misundertood what I was saying - they can equally go against ex-employees. And still enforce the repayments (in court if necessary - I am getting fed up of saying if you owe it - can we take that as read???). If you leave therefore - you still owe the money as a general debt - you still have to repay it (they simply cannot deduct it from wages) and can take you to court for repayment. That may reduce (if you genuinely cannot afford it) the monthly repayments - but it adds to the debt with costs and you get a crap credit record for a CCJ.

 

They cannot claim a repayment past the six years - that is just law. The only repayments they can claim must be within the six years. before that it is lost to them. If the overpayment is more than that, any amount more than six years ago cannot be claimed and must be written off. But that does not mean that the repayment must be over six years - as I said before, the law says that it is lawful to deduct the whole of the salary except that payment must not go below the NMW. This cannot be challenged in law - provided it doesn't go below the NMW is is a lawful deduction.

 

But any deduction must be evidenced. If they cannot evidence they cannot reclaim the amount. That leaves them with a decision which is to drop it - or deduct from wages. At which pint, if you believe that the deduction is not evidenced and therefore not lawful, you must take them to a tribunal for unlawful deduction of wages. It is then a matter for the tribunal to determine.In such a case it is up to te employer to prove that the deduction is lawful - not to you to prove it is not.

 

I realise this isn't ideal advice - because I can't tell you whether the repayment is owed. And it may or may not be. So it is up to you to determine that fact.

[daveginboav]

Once again many, many thanks. I realise it may not seem so but I can accept what you say and acknowledge your experience, but please forgive me if I seek further clarification. I accept what you say about having to pay debts; I cannot dispute this. You mention debt law, but appear to dismiss employment law. My question about a difference between overpayment of wages/salary and overpayment of allowances was in reference to Employmet Law, both statute and case. I hear what you say about going after ex-employees and clearly you are coming from the debt repayment point of view. But in this respect is it equitable to go after some and not others (given that they are also not going after employees who received the same allowances over the same period but simply through ineptitude have not managed to extract them from the database). Is there an Employment Law and indeed Human rights view on all this? I really do understand the debt point of view, especially when such debts have been freel and conciously entered into, but have deep concerns that taken to its ultimate conclusion that anyone can "give" money to anyone else and then subsequently claim it to be a mistake backed up with irrefutable evidence and demand the money back. I hesitate to use the word "laundering".

 

You have though given me heart. I do not believe they have contemperaneous documentary evidence of the criteria that applied at the beginning of the payments being made. I do believe some evidence exists of a difference of interpretation of the criteria in force at the time (without being that explicit about the actual criteria). For these reasons, coupled with the long time of almost 5 months since they raised the issue, the silence since and the silence since the raising of the grievances, I expect them to drop the case. We'll see.

[SarEl]

Yes, I understand what you are saying, but employment law has very little to say about these matters beyond what I have already said. Employment law recognises that employers do make mistakes in payments (and that is any payment - for these purposes there is no difference between salary and allowances) and permits them to reclaim such errors from employees as lawful deductions from wage. Employment law also sets down certain restrictions about how much can be deducted - but only by being able to prevent deductions which take individuals below the equivalent of the National Minimum Wage. In some cases, where an employer does not have the power to make deductions, it can prevent deductions. But none of this permits a tribunal to overturn a debt on any grounds - and if there is a dispute about whether the debt is owed, they won't deal with it at all, because that is the terrain of a different court - they aren't qualified to make such judgements. It permits deductions (any deductions except for those which are legally required) to be challenged in a tribunal if they are made, but only on the basis of general law - it does not enter into whether the employer is morally correct in what they do, and nor can it consider whether it is done "equitably" because they have no powers to decide these things. Their remit is strictly confined to "does the employee owe the money" and "is the deduction within the legal framework".

 

The law of debt also does not consider whether the debt or the repayment is equitable. This is not a collectyiove matter - debt is individual. To take another context, if a shop sells an item to 100 people, and only 80 of them pay up their credit agreement, the fact that the shop choose only to pursue 10 of the remaining 20 through the courts does not invalidate the debt of each individual - you cannot claim that you don't owe the money because the shop didn't chase someone else for it! The same applies here - if you owe the money (and I am still not assuming that you do) then it is YOU that owes it, and whether the employer chases (or is nor able to chase) someone else for it doesn't mean you don't owe it or they can't chase you. Understand?

 

The argument therefore has to be "won" before enforcement - it is about whether they can evidence that the debt is owed by anyone, and obviously it is up to them to prove that an overpayment has been made. They would have to specifically show that an error had occurred - it would not be sufficient to show that you had been paid this amount and claim they want it back, they would have to show how the error occurred and that it was an error. This sounds like it could be harder than it ought to be (if they had decent accounting systems then this wouldn't have gone on for so long!). And it could be rather "grey" an open to interpretation when they find their evidence. So, for example, if a manager responsible for all this made a conscious decision that you were entitled to the allowance, then that would be a decision - not an error. But if the manager read the criteria and misapplied them, or ticked a wrong box on form for payroll, then that is a mistake. These things can be very hard to prove - either way. But it is up to the employer to prove, not up to you to disprove. Obviously, if you can disprove or throw into question their case, then so much the better - but you don't have to prove anything here because nobody can simply claim you owe them money and get it. They have to prove it is owed.

[daveginboav]

SarEI - that is brilliant. I now understand much better. Very many thanks for your work on this and your early responses. I will keep you and others posted on how matters develop. When I get access to my other systems I will post the linked references I made in earlier posts.

[daveginboav]

I promised I would add some links to references I made earlier.

 

In a previous post I mentioned mistakes of law and mistakes of fact. In posting No. 7 of a thread started 23rd August 2007 "query about salary overpayment" (sorry I am not permitted to add links yet)

more detail is provided. However, I should have read further. It would seem that recovery after mistakes of law was then permitted following a famous case mentioned in posting No 8 of the same thread.

 

In short SarEI is correct - a mistake is a mistake whether it be in law or fact. There is no difference and the 1996 Employment Rights Act Section 14 permits recovery of overpayments. (still some caveats to be put to that though largely about whether there is evidence to back up any recovery that is attempted). I suggest that evidence over interpretations of rules etc is more difficult to prove than evidence over simple factual errors such as computer calculations.

[daveginboav]

With regard to the Limitations Act bits can SarEI or somebody else please advise whether its 6 years since the mistake was made or debt first occurred OR is it 6 years from discovering the mistake and being notified of the mistake? So if I received a payment over 6 years ago and continued to do so every month since, can the payments of over 6 years ago be recovered or just the ones less than 6 year old?

[SarEl]

No, the six years is backwards from the date that you were notified of the debt - before you are notified you don't know there is a debt so you can't repay a debt you don't know about. Anything before that cannot be recovered.