Debt to old company – Legal position / HR advice please

Long story short:
Old company treated me quite badly, so I left. They had paid me relocation allowance; the terms of which stated that they ‘may choose to’ recover the money pro-rata if I left within 2 years. I left within 2 years.

Just before I left, I got a summary email from HR with all sorts of leaving information. One of the things it stated was “Outstanding Debts: £0”

Having now been out of there for a week, I’ve just received a letter from a payroll consultant containing my final payslip, and stating that they have used my final pay against repayment of the ‘overpayment’ (i.e. the relocation allowance) and stating that I now owe them a further £3,934.42 to settle the debt completely.

I was fully aware that leaving was going to require me to pay this dosh back to them, so I didn’t spend it – it is sitting in a savings account with me trying to ignore it.

My question is this: Given that they have given me in writing a statement saying that I have no outstanding debt, can I use this to avoid paying them back anything? Further than that, would I be able to get my final pay cheque out of them?

Thanks in advance,
Dave

Please dont tell us you did work in the public sector.

I would very much doubt they have any right to ask for the money back at all – I seem to remember that although it often appears in contracts its unenforceable.

get legal advice

Write back and say you’re thinking of taking them to court, tribunal, whatever for constructive dismissal but that you will consider the matter closed if you don’t have to pay back the outstanding amount.

private sector.

I did have another argument with them in my final month – they had given me a payrise to try to persuade me not to leave (too little too late).

When I handed in my notice, they tried to take the payrise back. I spoke to ACAS and they said they couldn’t do what they had done as I had it in writing that my pay had increased.

I sent a calmly forceful email mentioning ACAS and the relevant employment act. They shat themselves, apologised and gave me back pay.

This does make me think that it would be a good idea to do something similar here.

If they had treated me well, I would have a) not left, and b) just paid it back. They pissed me off, so now I want to screw them for as much as possible.

Dave

So a private company, owned by shareholders gave you 4k to move, and now they want it back , to right they are, its there money, pay it them back, thats the terms of agrement.

There was a case a few years ago that changed the situation you have described of the company claiming back overpayments to employees so that the company had to take on the expense of any such errors they made including overpayments of holidays, SMP, SSP and Benefits in Kind.
HR isn’t my department but I have had to refer to previously, speak to an HR specialist and they will be able to quote the case law for your argument.

Please dont tell us you did work in the public sector.

So a private company, owned by shareholders gave you 4k to move, and now they want it back , to right they are, its there money, pay it them back, thats the terms of agrement.

Well project, I wonder where you would have gone with the Public Sector option, I’m guessing probably about the same place but with some added sputtering indignation.

TJ – I would very much doubt they have any right to ask for the money back at all

Of course they have the RIGHT to ASK for the money back, there was an agreement to that effect. . However as TJ suggest the enforcement of such a clause may be difficult – although I would be surprised if it was completely impossible, assuming the original agreement was properly constructed. I’m guessing we are talking about something more like £10k that you were given (not the £4k outstanding). It seems completely reasonable that an employer who offers you such an incentive for relocation can recover a chunk of it when less than two years later you decide you are worth much more and jump ship.

It seems completely reasonable that an employer who offers you such an incentive for relocation can recover a chunk of it when less than two years later you decide you are worth much more and jump ship.

Well, and obviously, I’m taking the OP’s word for it, he says:

If they had treated me well, I would have a) not left, and b) just paid it back. They pissed me off, so now I want to screw them for as much as possible.

So it doesn’t seem like he’s leaving because he’s decided he’s worth more. Or did you not read that bit?

Hmmm, hang on a minute.

OP…anything to do with this thread? Where you said that your employer hadn’t paid your relocation expenses?

poly, it was 8k they gave me, I stayed for a few months afterwards. To be honest, the decision to leave was taken before they gave me the money – they gave me it to try and smooth things over after they shat on me from a great height.

I’ve been doing a bit of research into whether employers have the right to deduct from my wages. It appears that they can do so if you have given them written permission to do so. I’m trying to work out whether or not I have done this.

There is a ‘relocation policy document’ which details how they will claim the money back if you leave. I’m not sure whether this counts – I think there might have been something in my contract to the effect that policy documents form part of my contract.

The actual form I signed to request payment of relocation of expenses doesn’t mention that they’d ask for it back.

I agree that it is reasonable for them to ask for it back; however their behaviour wasn’t reasonable, so I don’t see why I should be reasonable and give it up without a fight.

Dave

DD – yeah it is to do with that… after that all quietened down, they gave me relocation expenses and a payrise to appease me.

It didn’t work.

Dave

Private company you say?

I suppose only you know if they can afford the £4K.

Screw them for it if you can. Sounds like they screwed you. (Again, all this is taking your word for it)

They can definitely afford it… we’re not talking about a one man band here; we’re talking 40,000 people plus, worldwide.

Back to the question – is it worth emailing them back saying “you’ve already told me I don’t owe you anything. please send my my final pay.” ?

Dave

I don’t see why clawback can’t operate – it’s common in employment contracts (albeit employment law wasn’t my are of practice, I litigated).

The “no debts” statement is clearly key – I’d need to see the context it was made in but it seems pretty strong to me.

I would argue that to the hilt at this stage – another forceful but calm email mentioning that you’ve taken advice. In fact if you want me to draft one for you I can make it look like it’s come from a lawyer (I am an unemployed lawyer) and that may have more effect.

It amazes me what clowns employers can be.

Unlawful deductions from wages

Introduction
This article explains the protection given to workers in relation to deductions from their wages under the Employment Rights Act 1996. Sections 13 to 27 of the Employment Rights Act 1996 (ERA 1996) set out the provisions that protect workers from unauthorised deductions from their wages.

Protection against unauthorised deductions
Section 13 of ERA 1996 prohibits deductions from a worker’s wages unless:

The deduction is required or authorised by statute or a provision in the worker’s contract; or
The worker has given their prior written consent to the deduction.

What deductions can I make?
You can make any deductions:

Which are “required or authorised by statute”? For example, deductions for income tax and national insurance contributions. It also includes deductions made pursuant to the Attachment of Earnings Act 1971;
Agreed in the employment contract. Of course if the deduction is made under a provision of the worker’s contract then the worker must have seen the term or (if it is not a written contract) must have been told in writing of its effect before the deduction is made;
The contractual provision has to make it clear that the deduction will be made from the worker’s wages. You must also be able to show that the event justifying the deduction has occurred;
Agreed by prior written consent. The worker’s prior written consent has to be given prior to the event giving rise to the deduction, not just prior to the deduction itself;
In order to reimburse the business in respect of an overpayment of wages or an overpayment in relation to expenses incurred by the worker in carrying out their employment, for example, a car allowance that exceeds the actual amounts incurred by the worker;
Made in connection with any disciplinary proceedings;
That is statutory payments due to a public authority (such as HM Revenue and Customs). The deduction will be lawful as long as the employer deducts the amount specified by the authority. If the worker believes that the authority has incorrectly calculated the amount to be deducted, this is a matter between the worker and the relevant authority;
Payable to third parties (for example, contributions to a pension scheme or trade union dues) made either pursuant to a contractual term (to which the worker has agreed in writing) or with their prior written agreement or consent;
Made from a worker’s wages for taking part in a strike or other industrial action;
Made to satisfy an order of a court or tribunal for the payment of an amount by the worker to the employer, provided the worker has given their prior written consent.

Threatened deductions are irrelevant.

Unilateral reductions in pay
If you, without contractual authority or individual or (if relevant) collective consent, reduce a worker’s wages, this will normally amount to a deduction.

No overall reduction in pay
If you make an unlawful deduction but, at the same time, increase another element of the worker’s remuneration so that there is no overall reduction in pay, there will still be an unlawful deduction from wages.

Remedies
A worker’s remedy for an unlawful deduction from their wages is to make a claim to an employment tribunal under section 23(1), ERA 1996. If the tribunal upholds the claim, it must make a declaration to that effect and order the employer to pay (or repay) to the worker the amount unlawfully deducted or received.

Net Lawman tips:

If you recover payments due from workers in breach of the relevant provisions of ERA 1996, you risk losing the right to recover the amount in question at all;
Ensure that you have the worker’s written consent to make the appropriate deduction before attempting to do so. You can do this by inserting a provision in the employee’s contract.

However, where for example, you pay the employee money and want it back in certain circumstances (for example, if you pay enhanced maternity pay but want to reserve the right to recover the enhanced payment if, for example, the employee does not return to work; or if the employer pays an employee’s course fees or the cost of training, but reserves the right to recover all or some of the cost if, for example, the employee does not complete or fails the course) then you should (before making the payment), require the employee to sign a form giving their written consent to the conditions of payment and return of the money.

Sorry this is a bit long, but if there is no reference to their right to recover the relocation costs from your final salary payment in your contract or relocation expenses agreement, then the company are almost certainly guilty of unlawful deduction of wages.

Send them a letter stating this point and quote Employment Rights Act and that you will take them to an Employment tribunal if repayment is not made within a specified time period. Also reference that nothing was owing as they provided a statement stating exactly that, so you consider the matter to be closed once repayment of your wages is received.

Finally, point out that any further attempt to pursue the money will be considered harassment and potentially demanding money with menaces.

cynic-al, this is an excerpt from the email they sent me:

Dear David,

We have received notification that you are leaving the company. Please note that your contractual end date is 18 November 2011 and your last working day is 18 November 2011.

<snip>

Company Property | Employee has this property | Actions to be taken by the Employee

ID Badge | Yes

<snip – A load of rows about laptops, phone etc.>

Outstanding Debts | No | Amount = £ as of (dd.mm.yyyy)

N.B. This will be deducted from your final salary. For any queries on the amount of your debt, please contact UK Project and Expenses

Please note:
It is your responsibility to ensure that any of the above company property is returned to <snip> before your last contractual date.

<snip – other bits asking about why I am leaving etc.>

Best wishes for the future

Kind regards,
Roxanne

neninja, I’m getting a bit doubtful about the unlawful deduction of earnings angle. They did tell me several times by email that they would be asking for the money back, and my staff manager did email me after I handed in my notice to specifically tell me that they would be claiming it back.

Wouldn’t that kill that approach because it counts as:

Agreed in the employment contract. Of course if the deduction is made under a provision of the worker’s contract then the worker must have seen the term or (if it is not a written contract) must have been told in writing of its effect before the deduction is made;

If there is mileage in them having told me that I owe them nothing, that seems like a more likely way of keeping the money.

Dave

theninja, alfabus’s employers haven’t deducted anything from his wages?

alfabus – looks like they are ****ed to me, I’d tell them to ram it – and where. Worth checking with a lawyer/ACAS if they push it.

The trouble (from the employers point of view) is that these clauses are as far as I remember legally unenforceable – if you refuse to give them the money back they can whistle for it.

I have come across this when people have been paid to do training and have the training fees paid for them – despite the clause in the contract the employer has no right to recover without the agreement of the worker

I THINK

Get real advice but agree to nothing

I think they will argue pretty quickly that the statement of zero debts was an error. Just because they recorded a mistake on an email doesn’t magically make it a fact.

If that were true I would write to Bill Gates and say “you owe me 5 million pounds”.

If that were true I would write to Bill Gates and say “you owe me 5 million pounds”.

surely a better metaphor would be if Bill Gates had sent you an email saying that he owed you 5 million pounds.

I have no idea how that would stand up though.

Dave

TandemJeremy – Member
despite the clause in the contract the employer has no right to recover without the agreement of the worker

Hasn’t the employee agreed to that clause in accepting the payment?

hels – a fair point re. error (tho I’m not sure how your email to Bill Gates could relate to that) – but if it’s in a formal statement (even by email) it carries more weight – particularly where, as here, there’s no contractual automatic debt created when the employee leaves – it’s in the employer’s discretion.

So they “can” choose to recover the debt.

They’s said “you owe us nothing”.

CASE CLOSED *smacks gavel*

If you turn around the ‘owing £0’ statement and instead they told you they owed you £5000 – would you expect them to honour it if they later said it was an error and could prove it?

as far as what they say you still owe – I’d just do nothing and see how it goes

Al, you need that music from Law and Order attached to your posts !

So my next step is to send them an email saying: “Thanks for your email, however, in your email dated xx you stated that I have no outstanding debts. Please arrange for my final salary to be paid in to my account.”

Should I phone ACAS first? or make some legal threats? or just keep it simple for now?

I won’t do anything tonight, will probably wait until Monday before I send anything. I’ll probably make a free email account to send it from, since they don’t have my personal email at the moment.

Thanks for all the advice guys.

Dave

I would take the legal advice befoer you do anything.

I have been involved with similar things on both management and union sides adn my memory is its not enforceable as its an unfair contractual term or something similar but IMO you should do nothing until you have had some real expert advice

Surely the best approach would be to seek proper legal advice then act on the basis of that. Just to add my own uninformed opinion, they paid relocation expenses and you did, in fact, relocate. This could be a wild shot in the dark, but aren’t those expenses deductible by the company? I seem to remember something like this in my current job.

No harm in telling them to ram it, speak to ACAS too.

theninja, alfabus’s employers haven’t deducted anything from his wages?

cynic-al – Yes they have.

neninja, I’m getting a bit doubtful about the unlawful deduction of earnings angle. They did tell me several times by email that they would be asking for the money back, and my staff manager did email me after I handed in my notice to specifically tell me that they would be claiming it back.

Wouldn’t that kill that approach because it counts as:

Agreed in the employment contract. Of course if the deduction is made under a provision of the worker’s contract then the worker must have seen the term or (if it is not a written contract) must have been told in writing of its effect before the deduction is made;

They can only make the deduction from your pay if your contract of employment / agreement relating to the relocation expenses give them permission to do so.

Your employer sending you emails stating that they will deduct it from your pay is irrelevant and gives them no authority to do so. You must have given consent prior to accepting the relocations allowance such as your signing the agreement.

Here’s the relevant sections from the ERA again –

Agreed in the employment contract. Of course if the deduction is made under a provision of the worker’s contract then the worker must have seen the term or (if it is not a written contract) must have been told in writing of its effect before the deduction is made;
The contractual provision has to make it clear that the deduction will be made from the worker’s wages. You must also be able to show that the event justifying the deduction has occurred;
Agreed by prior written consent. The worker’s prior written consent has to be given prior to the event giving rise to the deduction, not just prior to the deduction itself;

Threatened deductions are irrelevant.

Unilateral reductions in pay
If you, without contractual authority or individual or (if relevant) collective consent, reduce a worker’s wages, this will normally amount to a deduction.

By making a deduction without the correct consent in place they are making themselves liable to lose all rights to make any future claim for any outstanding amount too.

You really need to find a local solicitor who specialises in employment law and show them everything you have relating to your contract of employment, relocation expenses agreement and email correspondence, deductions letter etc.

Depends how far you want to push it really, as I reckon your acceptance of the salary deduction could be seen as recognition by yourself that there was an amount owing to the company and would prejudice any future challenge of the remaining £4k based on the use of the £0 owing letter.

No they havunt.

But they are trying to 😎

They have deducted money from me to the tune of the whole of my final pay cheque (which should have been paid on Friday). The letter informing me of this deduction is the same one that asks me to pay them more money.

I did have long email conversations with them about relocation, and it was made very clear that they could choose to claim it back if I left. I’m pretty sure it would be a dead end trying to imply that I hadn’t agreed to that.

I’ll speak to ACAS on Monday and draft an email along the lines of what I put above… namely, they said they might claim it back, and then they told me they wouldn’t. Hopefully they will back down, but I’m not sure I believe it will be that easy.

Cheers,
Dave

I ‘d be firmer…up to you.

Good luck.

For the amount involved a few hundred quid getting proper legal advice seems a good deal.

They took the whole of your final pay cheque – go for the jugular. Tahts bang out of order.

Do nothing until you get the advice.

I’ve never seen a professionally drafted employment contract that didn’t include a provision to make deductions from salary in relation to debts to the company.

Alfabus I suspect you will have it the wrong way round about “policy forming part of the contract”. Normally company policy and procedures do not form part of the contract (but breaking them is considered a disciplinary offence and may be grounds for dismissal).

They didn’t say “you owe us nothing” the said you oweD us nothing at dd/mm/yy – that is not the same thing.

DDSo it doesn’t seem like he’s leaving because he’s decided he’s worth more. Or did you not read that bit?

I did but you seem to have missed this bit:

they had given me a payrise to try to persuade me not to leave (too little too late).

TJmy memory is its not enforceable as its an unfair contractual term or something similar

I think I’ve seen similar suggestions about training paid for by the company, but I’m not sure that is exactly the same. (1) the employee is not the financial beneficiary of training (2) the company (usually) benefits from training the employee too. Reading between the lines, here we have an agreement which seems to have been made retrospectively as a “sweetener to stay” and then fairly soon after the employee is bailing out – which may not be fulfilling his side of the bargain. I agree though proper advice is the way to go – but it may not be quite as cast iron as others have implied.

I asked MrsTJ
She thinks you will have to show a breach of contract by them to not have to pay it back.

Perhpas the threat of a action for constructive dismissal might get them to pay up – I dunno. Constructive dismissal is very hard to show – without a cast iron case I wouldn’t advise tribunal but the threat might work especially if you do have some dirt to throw

its often a good tactic to threaten that – companies are often proud of their public image and don’t want muck to be thrown – and its likely to cost them to go to tribunal.

Depends to some extent why you left – how badly the fecked you over an what documentation you have.

Please let us know how it pans out.

good luck

I think I’ve seen similar suggestions about training paid for by the company, but I’m not sure that is exactly the same.

the one I was thinking about was training

Employer could have benefited from relocatiin too.

Poly how could this debthave arisen after the email?