COMPLIANCE
should be posed, such as whether the label of the payment on the payslip was clear. If, for example, an employee is overpaid for a Saturday shift allowance, but never works weekends, it could be argued that prima facie, the employee would be aware of the mistaken overpayment. For the second point, this could relate to where an overpayment resulted from information provided by the employee and could include scenarios where they had claimed extra unworked overtime on their timesheet, for example. This would be a prime example of the recipient being responsible for the error. If the answer is no to both questions, then the defence of estoppel could be relied on. There have been several cases which have tested the principle of estoppel in payroll-related overpayments. One such example is the case of County Council of Avon v Howlett. In summary, the facts of this case involved an employee who was overpaid occupational sick pay while on long-term sick. When the company attempted to reclaim the overpayment, the courts held that due to the complexity of the Council’s sick pay rules, the employee
accepted the money in good faith and changed their position by spending that money. In addition, the timing between when the payment was made and when the employee was informed of the overpayment was substantial, which only helped to satisfy the position of truth for the recipient that they were entitled to the overpaid funds. This case highlighted several areas for payroll departments to be aware of, to enable the recovery of overpayments. Firstly, clear terms should be provided for all payments to prevent confusion and, in the event of an overpayment of wages, the genuine belief that employees would be entitled to the funds. The case also stressed the importance of prompt action when an overpayment is discovered. Employees should be contacted as soon as possible to prevent a change in their financial position. There have been cases where employees have argued they weren’t aware of an overpayment, but estoppel by representation couldn’t be relied on due to the information available to the employee. Let’s take the case of Addo-Kwabi v London Borough of Waltham Forest. In this
case, the employee was previously working under a temporary contract as a part-time employee. They were made permanent and received a full-time salary in error. The employee argued that the reclaim was an unlawful deduction from wages. The employee’s argument was rejected by the courts due to the information that was available to the employee. The employee had changed from a temporary to a permanent contract, and no salary terms had in fact changed. Therefore, the courts didn’t accept the argument that the recipient wasn’t aware of the overpayment. The substantial increase in pay was enough to alert the employee to the fact there had been an overpayment. This case also stresses the importance of ensuring employees are fully aware of what they’re entitled to receive under their contract of employment, as this prevents the recipient from claiming they weren’t aware of the overpayment. Employers should always have robust and clear processes for overpayments to allow for prompt action. Clearly informing employees about their entitlement to pay mitigates the risk of estoppel by representation being relied on. n
GET THE BEST START WITH THE MOST UP TO DATE PAYROLL COURSE IN THE UK *
The Payroll Technician Certificate is the ideal first step for anyone new to payroll, and for those looking to refresh their knowledge.
PAYROLL TECHNICIAN CERTIFICATE
PAYROLL TECHNICIAN CERTIFICATE ADVANCED
£2.645 + VAT
£1,695 + VAT
Covers the core skills required to administer the payroll function including processing deductions, calculating National Insurance, pensions, student loan deductions and statutory payment considerations.
Includes the core skills from the Payroll Technician Certificate but with three extra modules covering: data protection and audit consideration s, automatic enrolment and pension principles and administering salary sacrifice for payroll.
Already done the Payroll Technician Certificate? If you have already completed the Payroll Technician Certificate, you can book on the Payroll Technician Certificate TOP UP to complete the additional modules from the ADVANCED course for £995 + VAT
Scan to book
Visit www.cipp.org.uk/study for full details and to enrol today
* Course is checked, and updated when neccesary, every two weeks
23
| Professional in Payroll, Pensions and Reward |
Issue 100 | May 2024
Made with FlippingBook - Online magazine maker