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Employee lives the dream

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.


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