28 October 2016
Hi
One of our clients has mistakenly overpaid their employee by paying their accrued long service leave on termination. They subsequently discovered that they were not required to pay the accrued long service leave in the circumstances. They now wish to recover the overpayment which is less than $10,000.
What is the appropriate jurisdiction to bring such a claim?
Kind regards
Thank you for the question.
Generally speaking if an employer overpays an employee by mistake the employee has an obligation to repay the overpayment. However, there may be circumstances where an employer is not entitled to recover. For example, where an employer makes a representation to an employee about their entitlements and the employee relies on that representation and, in doing so, sustains a loss (such as unemployment benefits). See TRA Global Pty Ltd v K [2011] VSC 480.
In this case, the court held that an employee was entitled to retain a significant redundancy payment made in error based on the common law defence of ‘estoppel by representation’ because of the employer’s representation that the employee was entitled to the money.
With respect to recovery of the overpayment, the employer has a right to bring recovery action in the civil courts which is usually a last resort, with most situations being resolved by agreement. As the amount is less than $10,000 QCAT or the Magistrates Court would be appropriate venues.
Regards
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