contract-law england-and-wales civil-law banking payment
Getting paid by mistake after leaving a company?
<p>Pretend someone worked at a company and was paid monthly. A month after leaving they are paid their severance, and should not receive any payment in the future.</p>
<p>A month later, they are contacted by the finance department, apologising that they were paid in error, and kindly asked to send the money back.</p>
<p>What would happen if this money was not returned?</p>
<p>The only results I found online state that the company would take it back from any future payments, however in the scenario above this person has left the company and therefore would not have any future payments.</p>
<p><strong>Edit:</strong>
I decided to do the right (and by the looks of the replies) legal thing and return the money, after checking with the CEO. They admit to a computer problem on their end, and apologised.</p>
<p>I might have misread some comments/answers, so just to clarify - this payment was made a month after my severance pay when I was not expecting any further wage payments from the company.</p>

<p><strong>What would happen if this money was not returned?</strong></p>
<p>The former employee would, based on the given circumstances, be <strong>guilty of theft</strong> <a href="https://thelawdictionary.org/contrary-to-law/" rel="noreferrer">contrary</a> to <a href="https://www.legislation.gov.uk/ukpga/1968/60/section/1?timeline=false" rel="noreferrer">section 1 of the Theft Act 1968</a>:</p>
<blockquote>
<p>(1) A person is guilty of theft if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it...</p>
</blockquote>
<p><a href="https://www.legislation.gov.uk/ukpga/1968/60/section/5?timeline=false" rel="noreferrer">Section 5</a> defines &quot;Belonging to another&quot; to include:</p>
<blockquote>
<p>(4)Where a person gets property by another’s mistake, and is under an obligation to make restoration [...] an intention not to make restoration shall be regarded accordingly as an intention to deprive that person of the property or proceeds.</p>
</blockquote>
<p><a href="https://www.legislation.gov.uk/ukpga/1968/60/section/4?timeline=false" rel="noreferrer">Setion 4</a> states that:</p>
<blockquote>
<p>(1)“Property” includes money...</p>
</blockquote>
<p>Although there are statutory defences to theft, at <a href="https://www.legislation.gov.uk/ukpga/1968/60/section/2?timeline=false" rel="noreferrer">section 2</a>, to acting <em>dishonestly</em> they are not satisfied in this scenario:</p>
<blockquote>
<p>(1)A person’s appropriation of property belonging to another is not to be regarded as dishonest—</p>
<ul>
<li><p>(a)if he appropriates the property in the belief that he has in law the right to deprive the other of it, on behalf of himself or of a third person; or</p>
</li>
<li><p>(b)if he appropriates the property in the belief that he would have the other’s consent if the other knew of the appropriation and the circumstances of it; or</p>
</li>
<li><p>(c)(except where the property came to him as trustee or personal representative) if he appropriates the property in the belief that the person to whom the property belongs cannot be discovered by taking reasonable steps.</p>
</li>
</ul>
</blockquote>
<p>A very similar set of circumstances arose in the case <a href="http://www.e-lawresources.co.uk/A-G-Ref--No-1-of-1983-.php" rel="noreferrer">A-G Ref (No 1 of 1983) [1985] QB 182</a></p>
<blockquote>
<p>The defendant, a police woman, received an overpayment in her wages by mistake. She had noticed that she had received more than she was entitled to but did not say anything to her employer. She did not withdraw any of the money from her bank account. The trial judge directed the jury to acquit. The Attorney General referred a question to the Court of Appeal.</p>
<p><strong>Held:</strong> [<em>by the Court of Appeal</em>]</p>
<p>It was possible for a theft conviction to arise where the defendant had not withdrawn the money. There was a legal obligation to return the money received by mistake.</p>
</blockquote>

<h2>That’s up to the company</h2>
<p>They might decide it’s not worth the hassle and write it off.</p>
<p>Alternatively, they might sue for recovery. They will almost certainly win that suit.</p>

<p>Generally the company is entitled to try to recover money they paid in error. In terms of civil law the company may sue the person on the basis of 'the doctrine of mistake'. They can apply to county court to claim the money. Up to £10,000 it will be a 'small claim'.</p>
<p>In terms of criminal law the person is committing theft if they refuse to return the money knowing it was paid to them by mistake.</p>

<p>You first need to know if the company is trustworthy. Paying money, claiming a mistake, and asking for money back is a very common scam. The money could go straight into the pocket of someone in payroll, for example. The simplest way for a genuine company is to contact your bank and tell them that the payment was made in error; the bank will be able to refund the money without any problems and without any risk.</p>
<p>In a slightly different situation - freelancer getting overpaid by mistake, say being paid $5,319 for a $3,519 bill, you could <em>bet</em> that it is a scam. For a reputable company, you would contact them independently before you pay anything.</p>
