Overpayment by ex-employer

October 7, 2008 11:15 AM

My ex-employer is claiming I was overpaid, and is asking for the money back - what should I do?

For about four years I worked with a local authority in the UK. 10 months ago I was offered a new job with a private company, so I handed in my notice and left.

Yesterday I received a phone call from my bank, saying that I had been overpaid by over £1200, and that they needed to recover that money. I had no idea that this had happened, and as far as I could tell from my remaining paycheques everything was in order. I mean, I didn't sit down and tot up my hours or anything, but it seemed to roughly add up to how much I'd worked.

I'm pretty poor at the moment - I took a paycut to take my new job because it's something I knew I'd enjoy. The bank offered to set up a standing order to pay the amount off over 12 months, but I can't afford it.

It just all seems a tad unfair because it was obviously someone else's mistake. I've emailed the local authority to try and get a breakdown of how exactly I was overpaid by so much, but haven't had a response yet. Does anyone know where do I stand legally? Or does anyone have any advice?

I'm finding the whole thing pretty upsetting at the moment tbh.

Thanks for reading

posted by hnnrs to work & money (21 comments total)

Do you have a labour board you could call? Laws in the UK may be more favorable to the little guy but I doubt it. In the US - they'd be entitled to take all of it back at once. Count yourself lucky that the bank is willing to set up a plan with you. It's not your money - you didn't earn it. It was a mistake. It sucks, but I can't see how you wouldn't be obliged to give it back. Try to negotiate the lowest amount of repayment per month that they'll tolerate - and check your paystubs from now on.
posted by Wolfie at 11:30 AM on October 7, 2008

Ask for proof that you've been overpaid before you agree to refund the money. But.. if they provide that and you have indeed been overpaid, I think ethically you should return the money, regardless of what your legal standing is. Perhaps, if your budget is really too tight to allow for a 100 pounds a month payment, you could offer to "work it off" by doing part-time work for your former employer.
posted by orange swan at 11:33 AM on October 7, 2008

Go to the Citizen's Advice Bureau - they'll tell you where you stand.
posted by fearfulsymmetry at 11:41 AM on October 7, 2008 [1 favorite has favorites]

I'm confused. What does the bank have to do with a former employer overpaying you?

Are the bank claiming that they put more money in your account than the employer deposited? I've never heard of this happening, but if it's so, your beef is with the bank not your former employer.

As far as I'm aware, if it's an overpayment by an employer, the bank have sod all to do with it. It would be up to the former employer to recover the excess through the courts. In that case, you'll get to put your side of the matter and, worst case, the court have to take into account your personal circumstances when determining how much your monthly payments are.

Good luck.
posted by veedubya at 11:42 AM on October 7, 2008

Someone may have made a mistake this time, too. Get proof that you were overpaid before you pay them.

It's interesting that it is the bank that is contacting you rather than your employer. Does this mean the bank made the mistake, not your employer? If so, there are a variety of grievance procedures you can go through if you feel the bank is acting in an unfair way.

You can contact your Citizen's Advice Bureau if you want some advice. But in these circumstances, if this was a true overpayment, I would imagine that you will have to pay back the money eventually. Just try to minimize the monthly payment as Wolfie suggests.
posted by grouse at 11:45 AM on October 7, 2008

Are you absolutely certain it was a representative of your bank on the phone? My first gut reaction reading this was "phishing scheme." You didn't give them account information, did you? - banks should never, ever ask *you* for your personal information (acct numbers, passwords, PIN numbers, mother's maiden name, etc.) over the phone.

In any case, I would ask for all their information and evidence of the supposed overpayment in writing, notarized (or whatever the UK equivalent is), mailed to your home address, immediately, and if possible, arrange an in-person meeting with a bank officer to verify this is all above-board. Confirm directly from the human resources department of your ex-employer that all this is true as well. The Citizens' Advice link cited seems to be the UK equivalent of US Legal Aid, and I would talk to them as soon as possible. Good luck.
posted by aught at 12:13 PM on October 7, 2008

My own story, if it is worth anything:

I left a job last December. They continued paying me until about March, despite my repeated calls asking them to stop. I still had to pay the money back. It was a pain in the ass. I had to call the bank, ask them to make up a draft. Then I had to mail it back.

If your bank record shows paycheques being deposited after you terminated your employment, then yes, you owe it back to the company. It was their screw up, but that doesn't mean you get a free ride. You didn't work for that money and you may end up getting audited on your tax return.

For me It wasn't a big deal since I don't live paycheque to paycheque. I can see how unfair it might seem if you were unaware that the pay was still coming, especially if the money is already spent. Perhaps you should work out a payment plan with them.

Your story is unclear on HOW you were overpaid. If it is more of he said/she said about how many hours you put in during your final weeks, then I would say the onus is on them to prove it. But if the secretary forgot to cancel the direct deposit, it's still not your money.
posted by Brodiggitty at 12:22 PM on October 7, 2008

It doesn't really matter who made the error, whether bank or former employer. If indeed you were overpaid, the legal apparatus is there to force a return of funds.

However, chasing you down takes time and money, and creditors will strive to minimize their collection costs. Quite often if you present them with an immediate offer of...say...60%of the indebted amount in exchange for writing off the entire debt, they will accept. Especially in situations like this where the fault is not yours. But first demand proof.
posted by randomstriker at 12:27 PM on October 7, 2008

Yeah, this doesn't ring true. Don't allow anything until you get an explanation (that you accept) direct from the employer. If your bank are really imposing payments to an alleged creditor for whatever reason, you need to re-bank. Get your wage, benefits etc away from that bank and get control of your money.

Unless you need a reference from these people, you should be repaying them off on your own terms. Repaying at the same rate you were overpaid in the first place might be a good starting point for negotiations. If they don't like, they may go for a county court judgement against you, in which case (assuming you can't contest the debt) you will need to make an installment offer based on your disposal income after essential payments.
posted by wilko at 12:34 PM on October 7, 2008

Definitely ask for proof of the (supposed) overpayment before you agree to do anything. While it may well be that some mistake was made, you can never be too sure. I've met more than my share of businesspeople who wouldn't be above trying to take-back your last couple of weeks pay.

And I would also query your bank as to why they immediately take your former employer's side and assume there has been an overpayment. What, exactly, is their role in all this? It seems highly suspect.
posted by Thorzdad at 12:36 PM on October 7, 2008

I don't understand why the bank would contact you, rather than the employer.

You definitely need to see proof of this first, and you most certainly should not offer any information like account numbers or amounts or your OWN paperwork until you get something in writing.
posted by rokusan at 1:17 PM on October 7, 2008

It doesn't really matter who made the error, whether bank or former employer. If indeed you were overpaid, the legal apparatus is there to force a return of funds.

The details matter because it's necessary to establish what the situation is. If there was indeed a mistake, repaying is the right thing to do - but if the bank contacted the OP that sounds extremely sketchy.
posted by Solon and Thanks at 2:25 PM on October 7, 2008

This sounds fishy as hell. The local authority should have contacted you directly regarding a payroll mistake. The bank has no authority to take the money out of your account without your instruction or a court order. The dispute is between you and the authority. Even assuming they asked the bank to contact you on their behalf (not having a forwarding address) the bank should have sent you this information via letter.

Contact payroll at your former employer directly to confirm this, and that it's not a phishing scam. It's then up to you how to negotiate the repayments with them. Assuming you were overpaid, they do have the legal right to recover the money, even after 10 months. It would definitely be worth talking to the CAB first.

The only other possibility I can think of is that the bank itself made the mistake - the error should then show as a contrast between your bank statements and your payroll slips, in which case you do need to arrange some form of repayments with them - it was their money you spent by mistake, unfortunately. Going in and talking directly to a branch manager is probably the next best step having first sought CAB advice.

Whoever is claiming it, make sure they provide you with proof in writing that you owe this money (which you can compare against your own paperwork) and don't agree to anything until you've had a chance to look over their evidence first and then negotiate. Don't take it to court though, you will lose - but you should be able to negotiate a workable payment plan.

Finally - I suggest running some form of accounts software, or doing your books by hand in future. I'm not being judgmental as I struggle to do this myself, but you should know reasonably well how much money is coming in and out of your accounts on a weekly and monthly basis. £1200 is a hell of a lot to come in and out without noticing if it turns out not to be some kind of scam!
posted by ArkhanJG at 3:29 PM on October 7, 2008

I should say, you will lose in court if you do in fact owe the money. If you don't actually owe either the bank or the authority anything, and they just claim you do, then theoretically you've nothing to fear from small claims court (which is where a £1200 claim would go) and you might even be able to reclaim some expenses for the time and stress of dealing with it.

The law relevent to this is the Employment Rights Act 1996.
posted by ArkhanJG at 3:34 PM on October 7, 2008

This payroll site has a basic rundown of what happens after an overpayment, and they basically second that you should contact the Citizen's Advice Bureau. Look it over and get more information about what type of overpayment the employer is claiming before you go any further.

I can't imagine that the bank I work at in the U.S. would do something like this. So I agree with others who think something fishy is going on. (We occasionally send back one check if it was duplicate paid or paid in error, but not something from almost a year later. )
posted by saffry at 3:37 PM on October 7, 2008

Ok, the way the bank explained it to me was that because they put the payment through, they're responsible for it, even if it was an error on my previous employers' part. It doesn't quite add up, but I didn't hand over my account number or any other personal information.

And, basically, in December last year a payment went through to my account which was apparently comprised of back pay due to an ongoing dispute between our union (Unison) and the government over a payrise we should have got at the start of the financial year. If that makes sense. As a result, I wasn't sure how much pay I was meant to be receiving.

I've also got my paycheque for my final month's employment - December - and it's exactly the same amount the bank's asking for. As we received our paycheques early in December, it was for the full amount of that month's wage - but I left their employment on the 21st of that month, and wasn't sure if I was owed anything in arrears. I'm guessing they've just screwed up that bit, thinking I left at the start of December rather than two-thirds of the way through it. Hopefully I'll only actually owe them a week's pay, rather than a whole month. I'll get in touch with them again tomorrow.

Thanks for your help everyone.
posted by hnnrs at 3:40 PM on October 7, 2008

Fair enough, I withdraw my comment about the accounts software. Dealing with union negotiation payments would stretch anyone's financial nous!

Best of luck, and hopefully it turns out to be a minor snafu.
posted by ArkhanJG at 3:52 PM on October 7, 2008

If you were represented by a union at that job, talk to your union representative there.
posted by winston at 5:46 PM on October 7, 2008

So they've faxed you something or sent you a letter or email clarifying that you can verify came from them for sure, right? I'm sure it's not too much trouble for a bank to formally ask you for that much money.

Just a quick summary of "how much and why" so you feel good about giving back whatever you "owe," because there it is on the paper in black and white and you can verify it with your own records. Right?
posted by ostranenie at 10:42 PM on October 7, 2008

I had this happen to me in the UK, in pretty much the same situation, some years ago and told my former employer. It turned out that it was a bank error and the bank eventually sent me a letter (they never called me about it) asking for the money back.

I didn't give the bank the money, mostly because I was getting annoyed by this stage as they had been faffing around with it for months after I originally notified them, and never heard anything more about it.

Not very helpful but just my own experience for what it's worth. I would wait for written information from the bank. Don't waste your time chasing them - you'll spend ages on it and that just adds to the total cost and inconvenience to you. Keep the money aside if you can, and once they send you detailed info in writing you'll be able to plan your next move. This was just some vague phone call, which serves to stress you out and not much else. Wait for something in writing.
posted by different at 1:13 PM on October 8, 2008

That was utter gibberish, sorry. To clarify:

* In the UK a few years back, I received an extra month's pay after leaving a job. There was no question that I wasn't entitled to it - I'd stopped working there.

* I notified my former employer immediately and asked for instructions as to how I could pay them the money back. They were vague and noncommittal.

* Months later, I received a letter from the bank saying that they'd paid me due to error and could I put the money in such-and-such account?

* I didn't.

* I never heard from either party again.
posted by different at 1:17 PM on October 8, 2008