Under the Employment Rights Act 1996 employees (the rights also extend to workers but both employees and workers, for the sake of simplicity, will be referred to as “employees” in this article) have generally a strong level of protection from their employer’s deducting sums on their wages. In order for the employer to deduct sums from an employee’s wages they either need to have the written consent of the employee or to have a statutory requirement to deduct such monies (such as National Insurance contributions from the employee).
However, if the employer has overpaid the employee (whether this overpayment relates to salary or any other benefit that the employee has received) then the case is different. In these circumstances the employee has two potential lines of defence: either they attempt to rely on the statutory provisions under the Employment Rights Act 1996 (the “weak” option”) or on the defence of promissory estoppel under common law (the “strong” option).
Stopping your employer under the statutory provisions
Where the employer has (or is seeking to) deduct sums from the employee’s wages to compensate for past overpayments there is generally a complete bar on the employee bringing a claim for unlawful deductions. This is the case even if the employer has miscalculated how much the overpayment is. This appears, therefore, to be a ‘non-existent’ defence.
However, the route open for the employee (if possible) is to dispute that an overpayment was made in the first case. The employee must therefore attempt to plead this as the grounds for the claim in the Employment Tribunal. To succeed in doing so the employee must advance evidence that they have not been overpaid, contrary to the employer’s assertion that they have been overpaid. If the Employment Tribunal refuses to accept the employee’s claim then the employee must pursue their employer through the civil courts.
Stopping your employer under the common law provisions
The employee may be able to stop their employer from deducting sums from their wages if they have been overpaid if the 3 conditions for promissory estoppel are met:
- The employer must have generally made a representation of fact which led the employee to believe that he was entitled to treat the money as his own; and
- The employee must have “changed his position” (i.e. spent either some or all of the money) in good faith and without notice of the employer’s wish to be reimbursed the overpayment; and
- The overpayment to the employee must not have been primarily caused by the fault of the employee
As can be seen from the above, employees do have a degree of protection from overpayments being reclaimed by their employer. However, these protections are limited. Below is a list of issues that the employee should consider in such circumstances:
- Has their employer possession of evidence of the overpayment?
- Has the employee been led to believe that they were entitled to the money they were overpaid?
- Is the overpayment primarily caused by the fault of the employer?
- Has the employee spent the money in reliance on the fact that they were believed that the money was theirs?
Redmans Solicitors are London employment lawyers and offer employment law advice to employees and employers. They are specialist unfair dismissal no win no fee solicitors and offer compromise agreement advice to employees.