100% wage deduction, IS THIS LEGAL?

[fsheny]

I have been on maternity leave since 10th nov, had the baby on 13 dec through a complicated c-section that left me ill for quite a while. During this time my husbabnd has been managing the finnances and I did not get a chance to open my dec payslip. On 8th Feb I received an email from work that there has been a payroll error that led to an overpayment of £891 net into my account nad that I should either transfer the funds back or send in a cheque.

After checking my account I realised that it was correct but the problem is that the money had been swallowed by overdraft and direct debits at the end of Jan and I did not physically have any money to pay back. On the 9th Feb I replied the email to HRM acknowledging the overpayment and the fact that the money needs to be paid back. I also stated that due to the fact that I'm on SMP of £499 pm I can only afford an installment payback of £100 per month.

I did not receive any reply to the email, I have just received an email from HRM stating that they have deducted all they could and there is nothing payable to me this month and and that they will deduct a further £371 from ,y pay nest month as well.

Is this legal? I mean can they take 100% of my smp leaving me, my 2yr old and my 2 month old baby with nothing at all due to an incompetence on thier part?

[postggj]

the answer is no in your case

 

section 13 of the employment rights act deals with this

 

section 14 states an employer can claim an overpayment of wages in one go

 

BUT

 

IT MUST NOT TAKE YOU BELOW THE NATIONAL MINIMUM WAGE

 

WAIT FOR MORE COMMENTS BUT IN MY OPINION THIS IS UNLAWFUL DEDUCTION OF WAGES

[elche]

Is this legal? I mean can they take 100% of my smp leaving me, my 2yr old and my 2 month old baby with nothing at all due to an incompetence on thier part?

 

Hi, fsh. Weclome to CAG and congratulations on the new arrival!

 

Have to say, I agree with gg - the law (section and 13 + 14 ERA 1996) is clear that an employer can make deductions from wages to recover previous overpayments of wages.

 

The law is also clear that for this purpose 'smp' is within the definition of wages. (s.27 ERA 1996).

 

Morally an ER should not make any deduction so large that it leaves a person in hardship.

 

Unfortunately, I think that legally (retail workers apart) they can deduct as much money as they want (see for example page 38 http://webarchive.nationalarchives.gov.uk/+/http://www.berr.gov.uk/files/file47736.pdf;

 

even if this takes the EE below the NMW - which I'm not sure applies whilst on mat leave??? in any event (see page 58 on same link)

 

I am unsure on the NMW argument, (i'm pretty sure they can) BUT you can call the NMW helpline on 0845-6000 678 - just ask them, 'Can my employer deduct such a large overpayment from my SMP so as to take me below the NMW?' - it may well be a waste of time but perhaps worth it, for the cost of one call - at least it is another opinion on the matter.

 

Thus, I think legally they can do this. I suppose there is the argument that by doing so in this manner and leaving you with zero pay destroys mutual trust and confidence - but this will probably not help you in reality.

 

Negotiation is the answer.

 

Che

[SarEl]

No - Postggi is correct. A deduction from wages cannot take the wage below the NMW unless it is final salary payments. If you intend to return to work then they should not have taken anything unless it is over the NMW. The actual site reference is http://www.direct.gov.uk/en/Employment/Employees/Pay/DG_175878

[elche]

A deduction from wages cannot take the wage below the NMW unless it is final salary payments. If you intend to return to work then they should not have taken anything unless it is over the NMW.

 

Hmm .... I'm still not 100% convinced. I am not saying the above is wrong - but equally I am not sure if it is right! This is for three reasons,

 

Firstly I'm not sure if the NMW rules apply whilst your on mat leave - this would make sense as for example £128.73 / 35 hours would be £3.67 per hour.

 

BERR say that, "The national minimum wage does not need to be paid for periods when the time worker is on holiday, sick or on maternity leave." http://webarchive.nationalarchives.g...file47736.pdf; (see page 59).

 

Secondly, I think that there may also be an argument that even where the NMW rules do apply where there has been an deduction this is 'ignored' for NMW purposes , so that one looks at the 'gross' sum received by the employee over the whole period of time to work out if they have received the NMW.

 

And thirdly BERR also state that, "Where an employer finds that he has accidentally overpaid a worker and then makes a deduction from the worker’s pay to recover the overpayment, the deduction does not reduce national minimum wage pay." (see page 39)

 

Thus the way I read the BERR guidelines unfortunately they can do this - BUT - this doesn't mean that BERR are right or that my interpretation of what they say is right!

 

It would be great if the OP could let us know the opinion of the NMW helpline on this matter, and of course all other views are welcome.

 

Che

[Sidewinder]

Sorry but I disagree. The NMW does not come into this. The OP is on SMP, and the rules are clear in that SMP is considered in the same way as wages in this regard. Deductions for a previous overpayment can quite lawfully be taken from this amount, however other deductions (for example Attachments of Earnings) cannot. Therefore, if an amount is overpaid, it is treated in the same way as a salary overpayment, and the employer can lawfully recover any amount he wishes even if this reduces the employee's pay for that month to nothing.

 

Even if this were a matter discussing the NMW, once again, a salary overpayment is treated in the same way as an advance, and this may be recovered without reducing the NMW within the Pay Reference Period.

 

As stated above, there is a very strong moral argument that the employer should act in a reasonable manner, with compassion, and with regard to the employee's circumstances, however this is not a legal argument. The best that the OP can hope for is, I feel, a plea for an advance and for this to be repaid over a longer period in order to avoid financial hardship.

[Sidewinder]

Sorry Elche - we crossed, but I think are saying the same things!

[elche]

Sorry Elche - we crossed, but I think are saying the same things!

 

Yep we did cross ...... and yes I agree with you - as per my first point that whilst on SMP the EE is effectively outside the NMW rules, and even if they were 'within' the rules a 100% deduction would be potentially lawful to recover an overpayment.

 

It would appear we are in agreement i.e. that the ER can in theory do this, unfortunately for the OP!

 

Che

[fsheny]

Thank you all very much for your very usefull replies, it is a bit dissappointing that an employer has the right to with hold 100% of wages but I guess it is what it is. I have spoken to the NMW helpline and they have confirmed that YES an employer can legally do this even if it leaves an employee with nothing as according to them, "it is monies already paid", so they are not really taking anyithgin away but with holding a payment that they have already made!!!!

[elche]

I have spoken to the NMW helpline and they have confirmed that YES an employer can legally do this even if it leaves an employee with nothing as according to them, "it is monies already paid", so they are not really taking anyithgin away but with holding a payment that they have already made!!!!

 

Hi fsh,

 

Thanks for letting us know what the helpline said.

 

I am sorry for your sake that I was right. It seems so morally wrong that an ER can do this leaving you with nothing but it appears that there is nothing stopping them legally.

 

I doubt the current lot in Westminster will change this any time soon either.

 

Kind regards in any event

 

Che

[postggj]

thanks for the education people