Legal News

Can I be chased for overpayments if I’ve left the company?

Date: July 03, 2019 by idu-net

Fraudulent attempts to “massage” expenses or any deliberate attempt to “con” the firm out of cash cannot be justified in any circumstances, however happy mistakes (for the employee at least) sometimes happen. Despite rigorous payroll and HR processes, sometimes you might wind up with more than usual in your pay packet or expenses.

Of course as an honest employee, you’ll immediately point out the error to the HR or payroll team, but sometimes we just don’t notice, or assume it’s all in order and spend it – but then we’re suddenly asked to pay it back. If you are still employed, repayment can be relatively straight forward, but what if you are no longer with the company?  Can your ex-employer still chase you for the overpayment which was their mistake – not yours?

Law of restitution

The law of restitution can enable a company to recover the “over payment by mistake” even when an individual is no longer employed.  In legal terms it “prevents the unjust enrichment of the individual at the expense of the company”.  For that approach to be successful there are three requirements:

  • The individual has been enriched, or has received a benefit
  • The enrichment of the individual  is unjust
  • The enrichment of the individual was at the expense of the company

Defence against a demand for repayment

However, a claim for restitution may be disputed by the individual in receipt of that chance windfall, even if they are no longer employed by the company. The main defence is that of “change of position”, where the you can show that you have changed your position for the worse –  for example you already spent the money that you thought was yours.

The key issue for a court to decide then would be whether it would be unjust to order you to make a repayment in the particular circumstances of your case.  In reaching that decision the court might take into account the size of the sum being sought to be repaid and the resources available to the person from whom repayment is sought. One option for the court would be to order only repayment of the amounts that have not already been spent.

Did you ask if it was a mistake?

However, case law in these matters has established that, if you thought you had been overpaid but chose not to make a simple enquiry to establish whether or not that was the case, you cannot rely on that “change of position” defence.

Should you require advice about this or any other issue, please visit the IDU Legal website or call the FREE legal helpline on 0333 305 4357