Overpaid Earnings

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  • #39789
    stevedaymond
    Participant

    I have a case where the customer was paid an incorrect higher amount by the employer. The claim has been set up from May this year. A letter has now been provided from the employer confirming the error and that the overpayment of wages will be deducted.

    Having looked through previous posts im unsure how to deal with the overpaid earnings. Can I go back to May and correct the error as the employer has confirmed the wage was too high and the overpayment will be recovered?

    It seems harsh to include the higher wage (although received) due to an employers error and then not deducted the recovery from the future wage as its not an allowable expense!

    Any help would be greatly appreciated

    #113394
    Kay_Tade
    Participant

    Would the future wage not have been reduced already, to take into account the higher amount, and then deductions applied to the actual wage he should have received? Can’t think of anything that would allow you to go back and revise based on the reduced wages. He received the money and it has been correctly taken into account. The future payments are his proper earnings and should be taken into account per the regs accordingly.

    #113404
    Kevin D
    Participant

    In effect, the clmt is asking that his earnings are assessed as:

    – gross earnings;
    LESS tax
    LESS NI
    LESS repayment of overpayment

    When looked at in that way, it becomes clear that the repayment cannot be allowed as there is no provision to allow it as a deduction from gross earnings.

    However, there is one potential argument for the clmt. Is the employer recovering the o/p by reducing the clmt’s GROSS earnings, or, by deducting from NET earnings? If the former, there may well be an argument that the reduced earnings are, for now, the earnings that should be taken into account. If the latter, my view would be firmly that the repayment deductions are not allowable.

    #113423
    Andy Thurman
    Keymaster

    I see no reason why you cannot revise for the period his wages were overpaid – you have the proof of this (and the repayment). You just need to ensure you don’t double count it i.e. the ongoing earnings (while repaying) should simply ignore the repayment amount.

    #113427
    John Boxall
    Participant

    See

    Treatment of backpay

    Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and—and in short you are for ever floored.

    Wilkins Micawber, Ch12 David Copperfield

    #113429
    stevedaymond
    Participant

    I have been looking at 79(7) but that appears to fit increases in income. Does it also work for decreases?

    #113431
    Andy Thurman
    Keymaster

    Depending on what/when original decisions have been taken, the reduced earnings need to be looked at as either a revision or a supersession – I’m guessing its most likely the former.
    So – worst case scenario is a late revision request/late notification of an advantageuos change with “special circs” nailed on….

    #113433
    Kevin D
    Participant

    HBR 79(7) does not distinguish between increases or decreases. The word used is “change” and, in my view, requires that payment is taken into account IN RESPECT OF the period it relates to; not some other period. This is consistent with case law (notwithstanding the potential arguments about Tax Credits).

    #113435
    stevedaymond
    Participant

    Thank you all for your replies. Very helpful.

    #162935
    d-stainsby
    Participant

    You should deduct any amounts the employer deducts in respect of the overpaid wages  (see R(TC)2/03 and MH v SSWP and Rotherham MBC (HB)[2017] UKUT 401 (AAC))

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