The Law - Overpaid? Sort it out soonest

Richard Bird

Extra money in the pay packet is a welcome surprise. But what happens if it is paid in error? What happens if someone is moved up a point when they should not be?

The answer will depend on the facts of the individual case but there are some general principles.

If the overpayment is obvious, a member of staff may be guilty of dishonesty if they take advantage. In any case, an employer is entitled to deduct overpayment of wages from subsequent wage payments. This is an exception to the unfair deductions section of the Employment Rights Act 1996, so there is no access to an employment tribunal for unfair deduction of wages.

Sometimes an error is not obvious. Then, if an employer deducts unfairly and unreasonably, a case for repayment of a deduction may be brought in the small claims court. The claimant would have to prove it was the school's fault; that it was reasonable not to know that an incorrect payment had been made; and that they had acted on that payment in good faith (by spending the money) and so harm had resulted from the error. This might be difficult.

The employer, though, is expected not to act so as to undermine the employment relationship and damage trust and confidence. So, to deduct the total amount owed from one month's wages would generally be unreasonable unless the employee had agreed.

And if the member of staff has been placed on a point of the pay scale in contravention of the Pay and Conditions Document? It may depend on whether this change in salary can be considered to be an error or part of a contract. Don't shoot from the hip, but get advice specific to the case - not least because a person making a payment from public money without lawful warrant might, at least in theory, be personally liable for it.

Richard Bird, Legal consultant to the Association of School and College Leaders.

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Richard Bird

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