Employment Law Advocates

This article in the Daily Telegraph concerns a Barclays Bank employee who was paid £19,000 a year for three years when she should have received a salary of £9,500. An Employment Tribunal in Ashford ruled, firstly, that she does not have to return the overpayment and, secondly, that she should continue to be paid the higher amount. It is unfortunate that the news reports do not explain the reasoning of the tribunal because I am unable to see a way in which it could properly have reached this conclusion.

The starting point must surely be the law of restitution, which was applied to an employment contract in the case of Commerzbank v Price-Jones. This judgment of the Court of Appeal endorsed the principle that a person does not have to make restitution for an overpayment if she has changed her position to her detriment to the extent that it would not be equitable for her to have to repay the money. However, the principle was confirmed to be rather a narrow one and Mr. Price-Jones actually failed in his claim.

That was a claim brought in the civil courts and applying the principles of restitution in an Employment Tribunal is not straightforward. This is because most financial claims are brought as unlawful deductions of wages under the Employment Rights Act 1996, for which an overpayment by the employer provides an absolute defence under section 14(1). It is possible to bring breach of contract claims in the tribunal up to a maximum value of £25,000 but only where the employment has been terminated. Natasha Keenan remains employed by Barclays so she would not have been able to bring her claim in this way.

However, the really surprising part of the decision is the conclusion that the claimant should continue to receive what she had mistakenly been paid, with the effect that her contract of employment is varied without the agreement of her employer. This is not a situation to which the doctrine of mistake could be said to apply because the error was made after the contract was formed rather than before and so the employer cannot be treated as being bound by it. Nor is there any basis for this finding within the law of restitution, even if it were relevant. Barclays are a large employer and I would expect them to appeal.