Legal advice please - Overpayment

[Biff]

Any legal eagles out there keen to offer some free adivce?

Here's my story:

In May 2006 my company overpaid me. I didn't notice this at the time (the wife looks after the household accounts, and as I travel a lot, she assumed it was a payment for an expense claim made), and it was only brought to my attention yesterday (end of financial year) , over a year since the mistake was made. My company admits it was their fault. My company has now asked me to repay the overpaid amount as a matter of urgency.

Where do I stand legally? Do I have to pay this amount back, in light of the fact my employer made an error, over a year ago? Obviously if I do have to I'll do so in very small amounts over a few years, as the ovepaid amount isn't insignificant.

Thanks.

[Toaster]

My understanding is yes you do have to pay it back. Same with overpaid benefits for beneficiaries.

[vifferman]

You are obliged to pay it back, but the company cannot force you to pay it back in one lump - it has to be a payment scheme agreed between you.

[avgas]

Yes you have to pay it back - but the company must offer a reasonable payment plan as well.

[Nasty]

I think it is pay it back .. but on a suitable payment plan so that it does not cause too much pain.

[dhunt]

Well I ran into the same problem a few years ago. I was overpaid when I left a company (In Chch as well) and ended up having to pay it back. Fortuntely I hadn't spent the money so it wasn't to differcult to do but I was given the option to pay it back slowly.

[Karma]

I'd say pay it back in small amounts... but also... if it's the company you're currently working for, you need to decide how much you want your current job.

My guess is that if you refused to repay the amount that you wouldn't be in that job for much longer.

[timorang]

Why would you not want to pay them back if you were not entitled to it. If you made a mistake and gave someone something of value in error would you expect them to return it as the decent and right thing to do. Sure the onus is on them to get it right but it was a person who made the mistake (your payroll person or accounts payable) and their mistake reflects on them. I think regardless of any legal right you may have to keep the money, or your relationship with your employer there is a clear morally correct decision. If you agree you were paid it in error, formulate your plan to repay it before they impose theirs. Good luck.

[Biff]

I'm not saying I wasn't going to pay it back, but the finance directors initial response was, 'we want it all back before months end (today)', so I basically told him to take a jump, as I wasn't prepared to pay him all back by today - at which point he went ballistic, so I smiled and walked out of his office telling him I'd get back to him with my own repayment proposal for consideration.

I'm was just looking for some free legal advice in order to counter his unreasonable attitude.

Thanks for the advice so far y'all.

[timorang]

Ok that provides the missing piece. Certainly it would appear that the CFO could improve his/her style. In that situation I would put my position in writing:
Dear F##k Knuckle
"You raised a matter of an alledged incorrect/over payment with me.
I have had the opportuntiy to check my records and it is now apparent this was the case (on date... amount... account....)
Until this matter was raised by you I had no knowledge of this error
I am not in a position to pay this money back immediately (as you have requested) but I proposed repayment on the following basis.......
I authorise you to deduct $X per pay for X pays followed by a final installment of $X.
Please confirm that this is a satisfactory arrangement for the company

I am not a lawyer, this does not consitute legal advice, but common sense should prevail and something like this should take care of it. cc the CFO's boss (just to let him/her know they f##ked up).

I see the irony of your avator

[Oakie]

First thing to do is refer to your Employment Agreement and see if it says anything about overpayments. If there is no mention then it is a thing you can negotiate over and they cannot legally demand you pay back. They can however take you to the Small Claims Tribunal and go throught the process that way, however given the length of time elapsed there is no guarantee that the Tribunal would necessarily find in their favour.
Given that it is your current employer though you probably don't want to go that way. If it was their fault and they're asking for the money back a year later then you would expect that a reasonable employer would be flexible. Propose what you consider to be a reasonable repayment plan and if the two of you can't come up with something acceptable to both sides tell them you'll reluctantly see them in mediation if they want to pursue it.

Do check what's in the Employment Agreement first though.

[magicfairy]

You can also get free advice by ringing Department of Labour on 0800 20 90 20 or send an enquiry via www.dol.govt.nz - and look for "contact us" on the web site.

[dogsnbikes]

Any legal eagles out there keen to offer some free adivce?

Here's my story:

In May 2006 my company overpaid me. I didn't notice this at the time (the wife looks after the household accounts, and as I travel a lot, she assumed it was a payment for an expense claim made), and it was only brought to my attention yesterday (end of financial year) , over a year since the mistake was made. My company admits it was their fault. My company has now asked me to repay the overpaid amount as a matter of urgency.

Where do I stand legally? Do I have to pay this amount back, in light of the fact my employer made an error, over a year ago? Obviously if I do have to I'll do so in very small amounts over a few years, as the ovepaid amount isn't insignificant.

Thanks.

I was overpaid $11000 a few years back......For me it was a moral thing I knew the money wasn't mine and the company was unaware of the oversight on there behalf until I raised the issue with them

thats when things got messy....as they got shitty about it:angry: And I reminded them that it was there mistake..so don't blame me for your fuk-up...

I got it all sorted but it was a case of passing the blame to the innoccent...

your case is somewhat different as there is a huge time factor and they have just become aware of it.......

legally you will find that will have to pay it back morally it really comes down to how you feel :yes:

[Winston001]

What you have here is innocent mistake by both parties. Essentially, mutual mistake.

The basic rule is that the money is repayable. You weren't expecting it and aren't claiming any right to it. Fair enough. The employer did not intend or owe the payment to you, it was transferred by mistake.

As a matter of interest there are examples of prosecutions of people who have discovered windfall sums mistakenly deposited into their bank accounts. If they spend it, the law says they have no "colour of right". No lawful expectation that the money is theirs.

However there is an exception which could apply in your case. If you had received the money in good faith ie. had no reason to think it was an error, and spent it honestly believing it was yours, then you can't be compelled to repay. Particularly after this length of time.

For example, you are told bonuses/holiday pay will be credited and a largish lump arrives, most people won't go into the detail.

The counterargument is that if you normally receive say $1000/fortnight, and suddenly $10,000 appears, it is damned hard to argue you legitimately expected it. Hope this helps. :Punk:

[Skyryder]

What you have here is innocent mistake by both parties. Essentially, mutual mistake.

The basic rule is that the money is repayable. You weren't expecting it and aren't claiming any right to it. Fair enough. The employer did not intend or owe the payment to you, it was transferred by mistake.

As a matter of interest there are examples of prosecutions of people who have discovered windfall sums mistakenly deposited into their bank accounts. If they spend it, the law says they have no "colour of right". No lawful expectation that the money is theirs.

However there is an exception which could apply in your case. If you had received the money in good faith ie. had no reason to think it was an error, and spent it honestly believing it was yours, then you can't be compelled to repay. Particularly after this length of time.

For example, you are told bonuses/holiday pay will be credited and a largish lump arrives, most people won't go into the detail.

The counterargument is that if you normally receive say $1000/fortnight, and suddenly $10,000 appears, it is damned hard to argue you legitimately expected it. Hope this helps. :Punk:

There may however be one over riding factor that would declare the above advice 'null and void.' Your employment contract may have a clause that states something to the effect that any overpayment, be it bounus, expenses etc must repaid.

This also may be of use.

Employer may recover overpayments in certain circumstances



(1)In this section,—




Next pay-day, in relation to any overpayment, means the day next following the day on which that overpayment was made upon which the worker to whom it was made would, in the normal course of events, be paid:




Overpayment means any wages paid to a worker in respect of a recoverable period:




Recoverable period, in respect of any employer and any worker, means a period in respect of which that employer is not required by law to pay any wages to that worker, by virtue of that worker's having—




(a)Been absent from work without that employer's authority; or




[(b)been on strike (within the meaning of section 81 of the Employment Relations Act 2000); or]




(c)Been locked out (within the meaning of that section); or




(d)Been suspended.




[(2)Notwithstanding anything to the contrary in any collective [[agreement within the meaning of the Employment Relations Act 2000]] but subject to subsection (3) of this section, an employer who has made an overpayment to any worker may recover the amount of that overpayment from any wages to the payment of which by that employer that worker subsequently becomes entitled.]




(3)No employer shall recover an overpayment under subsection (2) of this section unless—




(a)By virtue of the methods or equipment normally used by that employer in arranging the payment of, or paying, wages to the worker concerned, it was not reasonably practicable for that employer to avoid making that overpayment; and




(b)Before recovering that overpayment, that employer gives that worker notice of that employer's intention to recover it; and




(c)That notice is given—




(i)Not later than 10 days after the next pay-day, in the case of a worker who has no fixed workplace:




(ii)Not later than the first day upon which that worker attends that worker's workplace after the next pay-day during normal working hours, in the case of a worker with one fixed workplace who did not attend that workplace during normal working hours on the next pay-day:




(iii)Not later than the first day upon which that worker attends one of that worker's workplaces after the next pay-day during normal working hours, in the case of a worker with 2 or more fixed workplaces who did not attend any of them during normal working hours on the next pay-day:




(iv)Not later than the next pay-day, in every other case; and




(d)That overpayment is recovered not later than 2 months after that notice is given.




(4)The validity of a notice purportedly given under subsection (3)(b) of this section shall not be affected by the fact that—




(a)It does not specify the amount of the overpayment concerned but specifies only the day on which that overpayment was made and the actions that led to its being an overpayment:




(b)It is one of a number of identical notices given to a group of workers to only some of whom an overpayment has been made, and provides that it applies to the worker to whom it has been given only if an overpayment has been made to that worker.




Skyryder

[Grahameeboy]

What you have here is innocent mistake by both parties. Essentially, mutual mistake.

The basic rule is that the money is repayable. You weren't expecting it and aren't claiming any right to it. Fair enough. The employer did not intend or owe the payment to you, it was transferred by mistake.

As a matter of interest there are examples of prosecutions of people who have discovered windfall sums mistakenly deposited into their bank accounts. If they spend it, the law says they have no "colour of right". No lawful expectation that the money is theirs.

However there is an exception which could apply in your case. If you had received the money in good faith ie. had no reason to think it was an error, and spent it honestly believing it was yours, then you can't be compelled to repay. Particularly after this length of time.

For example, you are told bonuses/holiday pay will be credited and a largish lump arrives, most people won't go into the detail.

The counterargument is that if you normally receive say $1000/fortnight, and suddenly $10,000 appears, it is damned hard to argue you legitimately expected it. Hope this helps. :Punk:

The doctrine of 'Estopel'.....think I spelt it right.

[Biff]

(d)That overpayment is recovered not later than 2 months after that notice is given.



...interesting.


Where do you get this stuff from Mr Ryder? Darned useful it be.

[McJim]

Good job the company ain't in Europe - EEC human rights court would see the company bust if they made ANY attempt to suggest the money be recovered.

Seems NZ law is set up to bully the little fellas and protect the companies.

[Winston001]

Skyryder - You make a good point and the terms of any employment agreement could be helpful. However this error occurred a year ago and "in good faith", which is implied into all employment relationships, Biff could argue too much time has passed.

Graham - good call, Estoppel.

[Bykmad]

Biff.

Check your employment contract, as there is normally a clause in that saying what happens re overpayments. The contract I use states that any over payment can be requested to be repaid by the employer.

[Baldyheed]

Spend the lot, then sell everything you own (including the wife), then go and join the French Foreign Legion (free trips round some uninteresting parts of North Africa, Central America and the Far East)

[Beemer]

I got overpaid recently, by a paltry $4 - they'd written the cheque out for but the invoice I'd submitted was for $4 less. I pointed it out so they could amend their records, thinking they would probably just write it off - yeah, right! They wanted me to send them a cheque so I pointed out that it would cost me postage and for the cheque, so I asked for their bank account details and said I'd pay it next time I was in town. A week later I got an email asking when I was going to pay it! So I deliberately made a manual deposit rather than paying it online, so it probably cost them $3.50 to recover the $4!

I know you are legally obliged to pay back any overpayment, but considering this company regularly make me wait three months for payment, $4 should have been written off.

[jaybee180]

I found myseslf in just this situation a year or so ago, and the overpayment was over a year old. Our employment contract covers overpayments so I knew it had to be paid back. But you are not forced to pay it back in one lump some and automatic payments were organised. In saying that though it's not allowed to be a paltry sum that takes years and years to repay. Check your contract, but I think you will find that even if it's not stipulated in the contract you are still obligated to pay it back. But you can do it on reasonable terms.

[Drunken Monkey]

Seems NZ law is set up to bully the little fellas and protect the companies.

You've never been an employer, have you?

[What?]

...interesting.


Where do you get this stuff from Mr Ryder? Darned useful it be.

You will find all sorts of interesting stuff here (http://www.legislation.govt.nz/).

A bit concerning hearing about EA's having clauses relating to overpayments - seems that some employers are happy to admit that they are careless with their money???
The law is quite clear - you do have to pay it back, and the amount & period are by agreement, but both sides have to be reasonable. If no agreement can be made, then you take it to the Labour Dept for mediation.
In this case, as they hadn't noticed the overpayment for 12 months, a 24 month repayment period would be considered reasonable.

[Steam]

In this case, as they hadn't noticed the overpayment for 12 months, a 24 month repayment period would be considered reasonable.

Yes, that sounds right.
When I worked for a giant evil electricity company, if we made a mistake in billing but didn't notice it for six months, we gave the customer the same length of time to pay it.