By Claire Mansell - 26 Jul 2012
What to do if your employer pays you too much.
A nice problem to have you might think. In a recent case in the
Employment Court (Foai v Air New Zealand Ltd [2012] NZEmpC
57) the court ruled that an employee was entitled to keep some
$42,000 that he had received over and above the pay that he was
entitled to. He had received the money in good faith and altered
his lifestyle as a result. He even saw his child support payments
increased on the back of his higher pay.
The court found that Mr Foai had acted appropriately. His
employment contract didn't include a rate of pay that would allow
him to check the figures himself but he did query his pay with the
HR manager and payroll on more than one occasion. On being assured
that all was in order he carried on "living the dream" and lived
beyond his means for some 16 months.
There are lessons for employers here too. When Mr Foai's
employment was changed as a result of an internal transfer he was
not given a new properly drafted employment agreement with clearly
stated rates of pay. His employer did not act promptly when staff
noticed possible discrepancies in his pay, and management did not
follow up when HR raised concerns. Their record-keeping also seemed
to be lacking as they had no written record of instructions that
they claimed to give to Mr Foai telling him not to spend the money
as he was being overpaid. The court didn't accept that evidence and
did not find any evidence of a mistake by the employer that would
have allowed them to argue that Mr Foai had been unjustly enriched
and ought to pay the money back.
Please contact Claire Mansell for more information on
this case or any other employment-related queries.