Bit stumped on this one....

Client is overpaid wages in June, July and August. Recovery by employer takes place in September, October and November. Authority's position is that reg 36 only provides for specified deductions from earnings - tax, NI, etc - and deduction for recovery of o/p isn't one of them. Unfortunately, I think they're right. So she's to be treated as receiving the overpaid earnings as income at the time these were paid, and also her "full" earnings at the time when she is, in fact, paying half back to her employer? Even overpayments of Tax Credits appear to be treated more generously - reg 40(6).

Whatever the regs. say, this is obviously grossly unfair. If there is no other way to deal with it, surely the LA should cover it with a DHP - or do those Regs. prevent that?

Can it not be dealt with on the basis that the overpayment was not earnings and not part of her pay? It was simply an administrative error which was subsequently corrected. An analogy might be someone who suddenly found money in their bank account which was not theirs, & which was later repaid to the bank. Would the LA treat the amount as capital for the period it was in the account? Perhaps the Regs. for capital would make them do that as well!

Surely someone in the LA can use some initiative & commonsense to deal with a situation like this? There must be some way round it.

Should have added - of course, if this was treated as capital it would probably have little if any effect on her benefit.

"Surely someone in the LA can use some initiative & commonsense to deal with a situation like this? There must be some way round it."

Agreed. Problem is that this is a side issue in a much larger HB appeal that already had a tribunal listing before I had any involvement. So the opportunity for that sensible approach has already passed.

CIS/1813/2007 dealt with payments of working tax credits after the person has stopped work, but HMRC wouldn't stop the payments. the outcome was unfair, and the Commissioner ruled that the payments couldn't be considered WTC... i don't know whether this might help you support the need for commonsense argument, which is so apparent...might be a bit of a stretch...

i can't think of another one, and i think this type of thing probably hasn't arisen precisely because adjudicators have employed commonsense well before it gets to commissioner stage. gawd help us if commonsense has been shoved out of the process...

legally, the money paid to her in the first 3 months wasn't earnings - it was the employer's money paid to her by mistake... i can't see that the payments amounted to income of any description. the regs take account of income, but these were payments, made by mistake, which she has to repay. i think i'd argue that the payments were neither income nor capital - the money was never hers, and is not covered by sect 136...

Don't have the references to hand, but there are a couple of Commissioner's decisions about students having to repay parts of their grants that might be useful. Roughly they say that money which is paid to the claimant under a clear and immediate obligation to repay is not income. I recently used it with a client who had had to take unpaid time off work to care for a child who suddenly fell very ill and whose employer carried on paying full wages for several weeks on the understanding it would be repaid when he returned to work. Was able to get him IS for the period he wasn't working on ther basis he had no income. Something similar might work to get the overpaid wages ignored for the period she received them. Think she's stuck with her full wages while she's repaying however.

Tue 15-Apr-08 10:32 AM by ciaran

I can't see a way round it just using the regs for guidance, but clearly doing the way they are they are taking the overpaid wage into account twice?

I wonder if they were to look at the last wage slip used when they were taking the overpaid wages off and calculated his income for the whole period from when they overpaid through to the date he finally paid them back if this would work?

The period covered is exactly six months and I do not see any reason why they cannot choose to assess the income over that period.


What I mean is - look at the gross pay to date, the gross tax and national insurance to date on November payslip take tax and national insurance away and divide the net over the whole period of weeks covered from when they started to pay too much through to when they finally recovered it.

That seems to be the fairest way.

Otherwise they need to be pointed in the direction of common sense, and look at the net wage as it was for the period it was paid.

I would have though that the LA now has ample grounds to revise their original decision on the claimant's average earnings, which I think is sort of what Ciaran is saying!

If a person is paid too much wages for - say - 5 weeks and then repays the OP by deduction from the next 5 weeks' wages, their average earnings over the 10 weeks is going to be their correct wages - isn't it?

The corrected amount of this person's earnings is clearly their average earnings, which is all the LA has to establish. If a person did 10 hours overtime one week but never, ever worked any overtime at any other time, we'd disregard that week from our assessment of that person's average earnings as being completely atypical. Regs 27 and 29 give plenty of legislative basis for simply saying that the weeks in which the person was paid too much were not typical. The fact that the person's repaying the overpaid amount adds weight to the argument - though actually it could be argued that this is immaterial.

Sorry, had a bit of a "duh" moment with this one.

Reg 36 provides for certain allowable deductions from earnings - NI, tax etc. and it is an exhaustive list in as much as it precludes the diregarding of deductions for union dues, Xmas clubs and the like....

But earnings (of employed earners) are defined by reg 35 and are "remuneration or profit" from that employment. Clearly, an overpayment of wages which is recovered is not remuneration or profit and cannot be treated as income.