Employee forced to repay over $11,800 after being overpaid by her employer…

An employer accidentally overpaid his employee over $11,800 when his accountant paid the employee an hourly rate instead of her commission.  After a long delay, the parties met to address the issue. Thereafter the employer offered the employee a new contract which included proposals for the repayment of the outstanding amount. The employee then resigned.

The Employment Relations Authority upheld the employee’s personal grievance claim for unjustified constructive dismissal. The ERA found that the employer had unfairly and unlawfully withheld the employee’s commission so as to facilitate repayment. 

The employer did so knowing that the employee was struggling financially, and did not agree to the change. The employer also failed to deal with the issue within a reasonable timeframe, and this created mistrust. 

The ERA noted that the employee’s resignation was thus reasonably foreseeable, especially after the employer sought to change the fundamental nature of her employment agreement by reducing her regular commission, and by changing her status to a commission sales person.

The ERA awarded the employee three months commission, and $10,000 compensation for loss of dignity and injury to feelings. The ERA held that as her award was in excess of the sum owing it would be equitable, given the circumstances, for her to repay the employer the full amount of money she owed.

Employees must be vigilant when receiving their pay as they may be forced to repay large sums of money, even when they are not responsible for, or aware of, any errors!

Alan Knowsley

Employment Lawyer Wellington