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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.

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.

What would happen if this money was not returned?

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.

Edit: 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.

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.

user5623335
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    What does the contract say regarding severance? – Iñaki Viggers Jul 31 '22 at 18:16
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    If you got paid in error, the company can demand the payment back. They can try to collect the outstanding by the "usual" means: sending you notices, engaging a collection agency, taking you to court, etc. – Hilmar Jul 31 '22 at 21:10
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    @IñakiViggers One month severance, which was already paid. They then paid the next month by mistake. – user5623335 Jul 31 '22 at 22:54
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    Or, why not just return it, and avoid the issue? Seriously. – paul garrett Jul 31 '22 at 23:41
  • @paulgarrett Because I have a bone to pick with them. – user5623335 Aug 01 '22 at 02:03
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    Ah. Well, ok. I hope you are good with the cost/benefit analysis of the situation. – paul garrett Aug 01 '22 at 02:43
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    @user5623335 maybe you have a bone to pick with them, but from experience remember it's rarely worth the effort. Endangering your reputation and exposing yourself to lawsuit... All for some petty revenge... Not the best idea – Mouke Aug 01 '22 at 14:04
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    @user5623335 I am not entirely without sympathy, but here is some life advice, take it or leave it as you wish: if you are going to get into a fight with some entity, don't do it on terms where you are legally in the wrong. It's like giving them a free high ground advantage. – rwallace Aug 01 '22 at 19:15
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    @user5623335 if you have a bone to pick with them you should understand what they can do. If they have to sue you to get the money back, and you wait before returning it, it will cost them a lot in lawyer fees before something happens. But if all they have to do to put you in trouble is filing a police report there is not much you can do. – FluidCode Aug 02 '22 at 16:25
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    I think it's sweet that you're asking the Internet if you're ok to keep this money that you're very clearly not entitled to. – Richard Aug 02 '22 at 20:11
  • Hmmm... "A bone to pick" but without detail - so all of these comments are only based on guesses. But for an alternative view point, I've been on the opposite side of this - I was double-paid by mistake for my second last month of employment and dutifully returned the money. I was never paid for my last month and always wished I had kept it. I know it's not the same since you don't claim they owe you any money... But we don't know the nature of the "bone" you have to pick with them and whether they did something that would justify you keeping the money. – komodosp Aug 03 '22 at 12:18
  • Having said that since you're asking on this particular forum (i.e. Law) you're not really going to get any answer except that you are breaking the law by keeping it and should return it. – komodosp Aug 03 '22 at 12:26

4 Answers4

29

What would happen if this money was not returned?

The former employee would, based on the given circumstances, be guilty of theft contrary to section 1 of the Theft Act 1968:

(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...

Section 5 defines "Belonging to another" to include:

(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.

Setion 4 states that:

(1)“Property” includes money...

Although there are statutory defences to theft, at section 2, to acting dishonestly they are not satisfied in this scenario:

(1)A person’s appropriation of property belonging to another is not to be regarded as dishonest—

  • (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

  • (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

  • (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.

A very similar set of circumstances arose in the case A-G Ref (No 1 of 1983) [1985] QB 182

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.

Held: [by the Court of Appeal]

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.

  • @MartinBonnersupportsMonica Yes, he has to pay it back but the question is What would happen if this money was not returned? –  Aug 01 '22 at 14:58
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    @MartinBonnersupportsMonica There is criminal liability, just not clearly where Rick has cited. 24A-1 makes it very clear: "A person is guilty of an offence if— (a)a wrongful credit has been made to an account kept by him or in respect of which he has any right or interest; (b)he knows or believes that the credit is wrongful; and (c)he dishonestly fails to take such steps as are reasonable in the circumstances to secure that the credit is cancelled." – Nick is tired Aug 01 '22 at 15:02
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    @MartinBonnersupportsMonica Incorrect - see definition of "appropriates" in s3 Theft Act https://www.legislation.gov.uk/ukpga/1968/60/section/3 (1)Any assumption by a person of the rights of an owner amounts to an appropriation, and this includes, where he has come by the property (innocently or not) without stealing it, any later assumption of a right to it by keeping or dealing with it as owner. ... – Lag Aug 01 '22 at 15:09
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    @NickstandswithUkraine I don't think thst applies. Any credit in to the OP's account is not a wrongful one as it is clearly derived from a mistake and not theft etc as required by Section 24A(2A) for this particular offence to be committed. –  Aug 01 '22 at 15:49
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    @NickstandswithUkraine The Crown Prosecution Service's website says "A credit is wrongful if it derives from theft, blackmail, fraud or stolen goods." https://www.cps.gov.uk/legal-guidance/theft-act-offences. Anyway, people have been convicted of s1 theft after keeping overpaid wages, just as Rick claimed. – Lag Aug 01 '22 at 15:52
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    @Lag Thankyou. That's pretty convincing evidence that Rick is right and I was wrong. – Martin Bonner supports Monica Aug 01 '22 at 15:54
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    @Rick Bleugh, I missed the "derives" from ... that is, stolen prior to the transfer into the account. You are of course right – Nick is tired Aug 01 '22 at 15:55
  • @Lag I considered citing section 3, however I couldn't find the used definition of "assumption" anywhere in the legislation. You can have within your possession something while not assuming that it belongs to you, which strikes the given definition of appropriates. – Nick is tired Aug 01 '22 at 15:57
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    In 1974 aged 22 I left the employment of my UK local authority. They paid me an extra month's wages amounting to just over £100 (worth about £1200 now). I was on benefits for the next three months, and spent the money. They wrote me several letters, and eventually took me to the local County Court, where the judge ordered me to pay it back at the rate of £2 per month, but declined to make an order for costs. – Michael Harvey Aug 01 '22 at 19:47
  • I think the "contrary" in your first sentence should be "according" or something, unless it has some legal meaning I'm not familiar with. Right now the first sentence says that the person would be guilty of theft, even though the indicated section of the law says otherwise. – Jordi Vermeulen Aug 02 '22 at 09:57
  • @JordiVermeulen Contrary, in this context, means that it is unlawful or *is in violation of a legal regulation or a legal statute. In other words, they –  Aug 02 '22 at 10:15
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    @Rick learn something new every day! Funny how jargon sometimes gives the exact opposite meaning to a normal reading of the same sentence :) – Jordi Vermeulen Aug 02 '22 at 10:19
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    @MartinBonnersupportsMonica: If you've decided your first comment under this answer is not correct, and the answer itself is actually not wrong, you might want to delete it. It's gotten a couple more upvotes since yesterday, and is the first visible comment. That might be a worse downside than removing context for the comments that reply to it. – Peter Cordes Aug 03 '22 at 01:30
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    @PeterCordes Done. (For others wanting context to the comments: I suggested the answer was wrong and it was not theft. The fact there have been successful prosecutions prove the answer is right.) – Martin Bonner supports Monica Aug 03 '22 at 06:25
  • @Lag Given the definition of appropriation, whereby if the company sent the money and OP did not "take it"; does this then also follow that if I throw my frisbee in a neighbor's yard by accident, and the neighbor refuses to return said frisbee; is he then guilty of theft because he appropriated my frisbee? – Flater Aug 03 '22 at 07:25
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    @Flater Yes... appropriation "includes, where he has come by the property (innocently or not) without stealing it" –  Aug 03 '22 at 07:32
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That’s up to the company

They might decide it’s not worth the hassle and write it off.

Alternatively, they might sue for recovery. They will almost certainly win that suit.

Dale M
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    I was looking for specific Law. – user5623335 Jul 31 '22 at 22:54
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    @user5623335 the specific law that says you can’t keep things that don’t belong to you? The one that is the heart of all property law? – Dale M Jul 31 '22 at 23:32
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    Since you labelled it England- here is from the UK. Theft Act of 1968. https://www.enhertsccg.nhs.uk/sites/default/files/Fraud-Spotlight-Overpayment-of-Salary.pdf – Damila Aug 01 '22 at 04:51
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    In Germany, they could ask you to return the money based on BGB § 812. – sleske Aug 01 '22 at 07:37
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    @DaleM In the US, if someone ships you something accidentally, you can keep it. It's not totally absurd to wonder if someone paying you accidentally could also be the same. – Azor Ahai -him- Aug 01 '22 at 22:01
  • Thanks, @sleske. Additionally to that, I think that in Germany it would only be a civil issue. I think neither "Betrug" nor "Diebstahl" nor "Unterschlagung" would hold here. – glglgl Aug 02 '22 at 08:23
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    @glglgl: Well, it would be up to prosecutor and judge to decide, but I agree - I don't see a crime under German law, just a civil wrong. – sleske Aug 02 '22 at 08:28
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    @DaleM: "you can’t keep things that don’t belong to you" - that's literally begging the question. You would need to prove that the money still belongs to the company; you can't just start out by assuming it does. – MSalters Aug 02 '22 at 10:25
  • @MSalters no begging is asking for things that don’t belong to you – Dale M Aug 02 '22 at 10:50
  • @user5623335: Torts don't have to have a name. – Joshua Aug 02 '22 at 16:35
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    The U.S. law about keeping unsolicited goods to which @AzorAhai refers is about preventing the scam in which a stranger sends someone merchandise they didn't request, then demands payment for it. (See 39 USC §3009). It is not in any way relevant to unsolicited bank deposits. – Mark Dominus Aug 02 '22 at 17:28
  • @MarkDominus Yes, but it makes Dale's quip a little less absolute. One could draw a comparison between the situations, for example avoiding scams where they reverse the transfer after asking it back from you; or merely putting the burden on people to not make mistaken deposits. – Azor Ahai -him- Aug 03 '22 at 21:41
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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'.

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.

Lag
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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.

In a slightly different situation - freelancer getting overpaid by mistake, say being paid $5,319 for a $3,519 bill, you could bet that it is a scam. For a reputable company, you would contact them independently before you pay anything.

gnasher729
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    Where do banks just reverse payments at the sender's request? Then, even if they do, they won't be able to if the payee has already removed the funds from their account. – Greendrake Aug 01 '22 at 14:26
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    @Greendrake And removing the funds is not necessarily "I'll grab the money while I can" - they might be switching banks for some unrelated reason, or move money from a non-interest account to an interest-bearing account - and in any of those cases if the reversal results in an NSF fee, it would be a problem. – manassehkatz-Moving 2 Codidact Aug 01 '22 at 15:11
  • @Greendrake you end up with an overdrawn account and all your diirect debits start bouncing. It can be days later. This is not the same as a payment not clearing, true, The effect is the same. – mckenzm Aug 01 '22 at 19:07
  • It's not "simple" and it may be unlawful for a payer or bank to reverse a cleared payment without the payee's authorisation. – Lag Aug 02 '22 at 07:27