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About a year ago I started a job, my contract for it says:

Pay and Expenses

The Employee will be paid £9/hr in arrears. Salary may be increased at the direction of The Employer subject to The Employee taking on additional responsibility which is agreed upon by both parties.

Overpayments

If the Employer makes an overpayment to the Employee to which she is not entitled, or which is more than that to which she is entitled, the Employer has the right to recover the overpayment by deductions from the Employee's salary or from other payments due to them. Any deductions will normally be made over the same period that the overpayment was made.

Notice of termination

The Employee is obliged to give the Employer 4 weeks notice to terminate their contract of employment.

A couple of months into the job my employer thought I was planning to quit and as they didn't want me to I was able to negotiate a pay increase to £11/hr, and my employer asked that if he gave me a new contract with this pay increase would I agree to work there for 2 years. At the time I said yes however no written contract containing our agreement was produced, so the only documents I have are my original contract, my pay however did go up.

Now however due to a change in circumstances I would like to quit and I'm wondering if my employer could reclaim all the additional pay they have given me over the months if I do.

Trish
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Chalky
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    Notwithstanding the question of whether your employer can claw back the extra pay -- hypothetically or practically -- you should recognize that it does not reflect well on you to renege on your agreement, especially for reasons that are outside your employer's influence. That the agreement was never set down in writing is irrelevant in this regard. If they do try to reclaim the extra pay and you fight that, then it probably reflects poorly on you regardless of the circumstances -- the extra pay was contingent on you staying, so why should you be able to keep it if you don't stay? – John Bollinger Oct 05 '22 at 19:45
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    Won't the next employer need a reference? Will you get one? – Weather Vane Oct 06 '22 at 07:49
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    "£9/hr in arrears" - according to the official page, the minimum wage in the UK is £9.50, unless you are under 23 years old. Are you under 20? Or is your employer violating the minimum wage? – sleske Oct 06 '22 at 12:00
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    @sleske it's been £9.50 since April 2022, so it's perfectly possible OP could have started a job "a year ago" and worked "a few months" before that rate was brought in without any funny business, regardless of OP's age. Before that it was £8.91, as shown on the page you linked. – Chris H Oct 06 '22 at 12:12
  • Not sure if you can go into details but this could depend on why you are leaving exactly. Leaving for a higher paying job would have a different impact then leaving because of some reason (such as personal or family medical issues) preventing you from doing your job. – Joe W Oct 06 '22 at 15:57
  • @JohnBollinger Your analysis omits a relevant factor: "y employer asked that [if he gave me a new contract with this pay increase] would I agree to work there for 2 years. At the time I said yes [however no written contract containing our agreement was produced], The two seem (to me) to be 'entangled'. – Russell McMahon Oct 07 '22 at 04:27
  • @WeatherVane - never in my life have I needed a reference from a previous employer in Europe, and that includes American companies that do work here. It just isn't the norm like in US. – Davor Oct 07 '22 at 08:52
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    @Davor Really? I mean, in Germany such a thing is common, and writing one is an art form. – Gregory Currie Oct 07 '22 at 12:38
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    @RussellMcMahon, this aspect of the matter has to do with the employer's and employee's general understanding of the situation, not the technicalities. If the employer thinks that they increased the OP's pay in exchange for an agreement to stay at least two years, then it does not matter whether that belief is enforceable or even reasonable -- which is where I started my previous comment. Under those circumstances, the OP leaving prior to the two years will at minimum burn a bridge that they might later find they would have preferred not to burn. – John Bollinger Oct 07 '22 at 13:11
  • @GregoryCurrie - from an employer or someone who worked with you? I had a few companies ask for a recommendation from one peer and one superior, but never from an employer itself as a legal entity. But then again, Europe is a big place, and I've worked in only 7-8 companies. – Davor Oct 07 '22 at 18:54
  • @Davor In Germany, it's called "Arbeitszeugnis". An employee has a legal right to get one from an employer. – Gregory Currie Oct 08 '22 at 03:07

5 Answers5

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I see that most (all up to this point) answers and comments are made around if a verbal contract is binding enough for the employer to "pursue back" the extra payment that you received... but as far as I can see, they don't even need to consider the verbal agreement.

Your employer thought (and apparently was right) that you were going to resign, so they offered you a payment raise in exchange for you to stay for two more years. You verbally agreed but this agreement was never written down nor signed by any of the parts, yet your employer respected it and for X amount of time you received more money that what your initial, written, signed contract says.

Now you want to quit; as mentioned above, you only have your original contract, a contract that says two things that are key for this "dilemma":

  1. The Employee will be paid £9/hr in arrears. Salary may be increased at the direction of The Employer subject to The Employee taking on additional responsibility which is agreed upon by both parties.
  2. If the Employer makes an overpayment to the Employee to which she is not entitled, or which is more than that to which she is entitled, the Employer has the right to recover the overpayment by deductions from the Employee's salary or from other payments due to them.

You received payments for £11/hr, which is more that that to which you're entitled according to this (one and only) contract; so, your employer has the right to claim back those £2/hr that, officially, you were not entitled to.

IF you want to argue that, as the 1st point says, both parties agreed to increase your salary for "additional responsibilities", YOU would also have to admit that you agreed to stay for two more years, agreement that you are not complying to; so, once again, it's a point in favour for your employer.

All in all, it all boils down to how your employeer "feels" when you present your resign letter; maybe they will just agree and let you go without further issues, but if they want to claim back that payment raise, IMO they have both the right AND the arguments to do so.

Josh Part
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    The only question I would have about this is, is such a contract legally binding in the UK? Is such a system where a raise of your current rate is contingent on working for x years enforceable? For another example, if you agreed to work 2 years with a $2000 signing bonus, and you only worked one year, would they have legal grounds to take all $2000 back, or only a portion corresponding to the time on the contract they didnt fulfil? – JMac Oct 06 '22 at 18:32
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    I am not familiar with English employment laws, but would a work contract which the employee can't terminate even be legal? And if it isn't, would that part being unenforceable still affect the enforceable part? – Philipp Oct 07 '22 at 11:56
  • @JMac IANAL nor live in UK but I'd assume that, if all parts of such system agree to it, then yes it's binding unless the agreement was made under illegal circumnstances (i.e. blackmailing, threatening, etc.); regarding your example: if you agree to work 2 years with a $2000 signing bonus, AND the legal contract/agreement specifies that, if work relationship is terminated before those 2 years the employer has the right to recover a % of those $2000 corresponding to the time left then yes, they have the legal grounds to take half back if you work only a year – Josh Part Oct 07 '22 at 15:11
  • @Philipp I agree that a contract an employee can't terminate is illegal (and dangerous) but this isn't about termination, it's about the employer recovering back money that, as per the signed and legally binding contract says, OP wasn't entitled to AND agreed to return in such case – Josh Part Oct 07 '22 at 15:15
  • @JMac this is done all the time in USA and when done appropriately the bonus has a defined vesting period. Usually the business would advance the entire bonus or in installments as a courtesy. It is understood but rarely enforced that the unvested portion would be returned if you quit early. If the agreement says that it all vests on the same day a year later, all of it would have to be returned. Other things that work that way include Stock grants, 401K (retirement) matching, etc. Raises can also vest over time, – crasic Oct 07 '22 at 20:05
  • Since you argue with the actual contract, you might also consider "has the right to recover the overpayment by deductions from the Employee's salary or from other payments due to them". So basically if they follow their own contract, they can only withhold future payment, not request compensation for past payment. So if OP has a short notice period they would at most loose (part of) the income from that notice period. I don't know if that would "help" OP, but it might be an aspect you might want to include if you agree since you argue with the contract already. – Frank Hopkins Oct 11 '22 at 23:53
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Your verbal agreement was to fulfill 2 years of service in exchange for increased pay - it's essentially a retention payment contingent on a service period. When properly documented, it's reasonably common for a company to attempt to claw back retention or sign-on payments if the employee leaves before the retention term is finished, although the clawback and retention terms are usually explicitly stated in the contract. Whether a company actually goes through with a legally justified clawback will depend on the size of the payment, the documentation of the terms, and possibly how badly you burned bridges on the way out.

It sounds like you are in fact breaching the verbal contract you had with your employer, although your employer will likely have a hard time proving the exact terms of the verbal agreement if it goes to court, and a judge will generally look more unfavorably on contractual deficiencies coming from the party that drafted (or should have drafted) the contract. Your employer had ample opportunity to draft a written contract but did not, so it may be harder for them to claim the raise was indeed contingent on a service term. But if this question as written was used as evidence in a case, you make it fairly clear that your raise was, in fact, given in exchange for a future service term which you've failed to uphold.

Nuclear Hoagie
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  • You've misread what OP said. As written in the question, the "2 years" thing was contingent on a written contract, not on the pay rise (which was apparently negotiated independently). I can easily imagine a conversation that went like that. – wizzwizz4 Oct 05 '22 at 20:09
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    @wizzwizz4 "My employer asked that if he gave me a new contract with this pay increase would I agree to work there for 2 years" - the employer did give a new (verbal) contract by offering terms and having them accepted. I don't see the service period as contingent on a written contract. The only wiggle room I see is the "hypothetical" phrasing used by the OP, and if there is any daylight between "if I offered you these terms would you accept them" and "do you accept these terms". – Nuclear Hoagie Oct 05 '22 at 20:19
  • If I negotiate terms with someone, and then say, "cool, can you give me a contract?", the contract I'm referring to is a physical object, or something analogous (e.g. a computer file). That's how most people I know use the English language. You don't give somebody a conversation. (You can make a contract with somebody verbally… but that's not giving a contract to somebody.) – wizzwizz4 Oct 05 '22 at 20:20
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    I think this comment section shows why written contracts are important, because they can remove ambiguity. – Gregory Currie Oct 06 '22 at 03:55
  • @wizzwizz4 "Can I buy your RC-car?" "For 20 Bucks." "here" - that's a valid contract. 20 bucks for an RC car. – Trish Oct 06 '22 at 08:33
  • @Trish "Can I have a pay rise for my labour?" "Sure. If I give you that in writing, will you stay here for the next two years?" "Absolutely." is surely two contracts, though. – wizzwizz4 Oct 06 '22 at 08:55
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    @wizzwizz4 no, that is one contract, because pay-rise and staying are contingent on one another, and your proposed 2 contracts would not satisfy as contracts to begin with: neither clause gives the agreeing party a mere peppercorn, but if taken as one contract, that is a valid exchange. – Trish Oct 06 '22 at 08:58
  • @Trish The first one is "pay in exchange for labour" – it's just changing the terms of employment. The second one gives each party an additional guarantee of stability in the employment relationship. Both seem fair to me? If the first one was "I'll give you $100", then I'd understand it not counting as a contract, but OP was working for the employer the whole time. The verbal contract just changed OP's compensation for that employment. – wizzwizz4 Oct 06 '22 at 09:04
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    I see why you assume that pay rise and staying are contingent on one another, and that might be what OP's actual verbal agreement was, but as written in the question, that's not how the conversation went. – wizzwizz4 Oct 06 '22 at 09:05
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    @wizzwizz4 A contract requires consideration. Consideration is an exchange of something valuable from one party to the other. A contract that states "Give me 2 bucks/h more for nothing" is not valid, it lacks consideration for one party, as does "stay 2 years for nothing*. A contract "2 bucks/h more for staying 2 years" has consideration. – Trish Oct 06 '22 at 09:17
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    @Trish Following the wording in wizzwizz4s comment: No one is saying give me 2 bucks more for nothing. One contract, the one in writing, is work in exchange for an amount per hour that is two hours more than the one in current contract. The current contract is not relevant since it will be replaced or amended by the new contract. The verbal contract is getting the above in writing in exchange for staying 2 years. – Taemyr Oct 06 '22 at 10:34
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    @Trish: Additionally a contract requires an intent to be bound. It's entirely possible that neither party intended the "stay for 2 years" to be binding. For instance, the manager could have been saying "I'm prepared to give you a new contract that pays you $2/hr more per hour. But that means paperwork and talking to HR; if you'll still quit tomorrow anyway I'm not going to bother with all that. But if there's a reasonable chance you'll stay for 2 years I'll do it" - i.e. the question is not about creating a legally binding obligation but about whether the effort's likely to be worthwhile. – psmears Oct 06 '22 at 15:43
  • The "2 years" could also be interpreted as "you're not going to get a payraise next year, this is our offer for 2023 and 2024". The problem with verbal contracts is that you usually have two interpretations of them, and this question only contains one. – MSalters Oct 06 '22 at 15:57
  • "although your employer will likely have a hard time proving the exact terms of the verbal agreement if it goes to court" Only if OP is willing to commit perjury. – Acccumulation Oct 07 '22 at 00:12
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What extra pay?

Your employer is paying you the rate you agreed.

Dale M
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    I think the point was that they have no documentation that was the agreed rate... the only official contract said 9, not 11. – nvoigt Oct 05 '22 at 10:58
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    @nvoigt - The employer agreed to increase the salary, as set out in the contract. The payslips the employee has are demonstrative of the increased salary. The employer has no basis with which to attempt to recoup that increased salary. The only recourse to the employer would be a small claims court, but a judge would likely throw the case out immediately. – GeoffAtkins Oct 05 '22 at 11:19
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    @nvoigt the only written contract, perhaps, but the oral agreement is also a contract. – phoog Oct 05 '22 at 16:01
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    @GeoffAtkins The employer agreed to increase the salary in exchange for the employee staying for 2 years, which they're not doing. It seems to me that the OP is trying to have it both ways, by holding the company to the verbal contract for 11, while ignoring their part of the verbal contract to stay for 2 years. I don't see this as particularly different from the company trying to claw back an up-front retention bonus after the employee fails to stay through the retention period. Of course, proving the terms of the verbal agreement in court is another matter entirely. – Nuclear Hoagie Oct 05 '22 at 17:52
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    @NuclearHoagie: "Of course, proving the terms of the verbal agreement in court is another matter entirely." – Well, if the terms of the verbal agreement cannot be proven, that goes both ways: the employee also cannot prove the raise, then. – Jörg W Mittag Oct 05 '22 at 21:30
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    @NuclearHoagie indentured servitude is illegal in the UK - an employer cannot force you to work for them – Dale M Oct 05 '22 at 23:05
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    @JörgWMittag But there is evidence for the increased salary being agreed to, since the employer paid an increased salary. – GeoffAtkins Oct 06 '22 at 05:13
  • @GeoffAtkins And if the increased salary was NOT agreed to, and paid without the knowledge of the employee, it represents an over-payment, and should be paid back. – Gregory Currie Oct 06 '22 at 05:30
  • @DaleM What has prompted you to make that comment? I don't think anything NH said suggests the employee should be chained to their desk. – Gregory Currie Oct 06 '22 at 05:32
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    @DaleM The employer of course cannot force you to work for 2 years, but that doesn't make contracts involving a service term void. The employee is free to quit whenever they want, but that doesn't make them immune to the consequences of breaching their employment contract. If you get a sign-on bonus contingent on a term of service, you are not an indentured servant merely because there is a scenario in which you'd owe your employer money upon quitting. I agree this may have shades of indentured servitude when taken to an extreme, but I highly doubt this situation would classify as such. – Nuclear Hoagie Oct 06 '22 at 14:48
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    @NuclearHoagie: Note that the employer had no choice but to increase the salary - it was overtaken by the minimum wage. This means that the employer cannot claim the full wage increase was conditional on the 2 years, which leaves the court with the question of figuring out what the real condition was. And that's the fault of the company (contra preferentum, they should have spelled it out) – MSalters Oct 06 '22 at 16:01
  • @MSalters Where does it say that? That would make the claw back illegal cause it would mean they were paid under minimum. Should be front and center of the question if that's the case. – Gregory Currie Oct 06 '22 at 22:48
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my employer asked that if he gave me a new contract with this pay increase would I agree to work there for 2 years. At the time I said yes however no written contract containing our agreement was produced, so the only documents I have are my original contract, my pay however did go up.

So here is the thing, there are two scenarios:

You implicitly agreed with the new terms by not quitting an accepting the pay rise

The pay increase was contingent on you remaining for two years. In which case, you need to pay the money back.

You didn't agree to the new terms

In which case, you've been overpaid, and need to pay the money back.

Gregory Currie
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Your employer can claim back money, but it would be difficult. First, you have the money, so they have to go to court to get the money - even if they win, they will lose money due to court costs. Second, in court you can say that you wanted to leave, they offered two pound more but never created a written contract. So it’s very hard to argue that they paid you more than they should have.

gnasher729
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    The post says the employer will deduct it (from the final salary payment). – Weather Vane Oct 05 '22 at 11:46
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    ...if so it is the employee who would have to take it to a court, and produce evidence that the extra payment of £2/hr wasn't a clerical error that the employer subsequently rectified. – Weather Vane Oct 05 '22 at 19:35
  • @WeatherVane: That's incorrect. It is judged on the balance of probabilities. Did the employer give a raise in a tight labor market, or did the employer give a raise by accident, at a time when they must have done so to match the new minimum raise, and then overlook it for months until the employee resigned? Which scenario is more likely? I'll tell you what the lawyer will tell the company: drop it, you won't win that. – MSalters Oct 06 '22 at 16:04
  • @MSalters if the company deducts the £2/hour, the ex-employee will have to take the matter to court, or to a tribunal. They will also need evidence. I made no remark about who would win or lose. My point was that the onus will be on the employee, contrary to the assertion of this answer. – Weather Vane Oct 06 '22 at 16:09
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    @WeatherVane: Yes, but that evidence is trivial: bank statements showing the payments and the final payslip with the disputed clawback. The company needs evidence to justify that clawback, and lacking a written agreement that will be problematic. There are probably PAYE records showing 11/hr too. To refute the claim, the employer needs to prove a verbal contract that does not agree with the written evidence, all while it's hteir own fault there's no written contract. I don't think it will ever go to court, the company lawyer will stop it before that. – MSalters Oct 06 '22 at 16:19
  • @MSalters you don't get it. Trivial evidence is evidence. I'll repeat what I said again: if the employer has taken the money (as the OP states they would) then the employee will need to take action. the money has already been withheld. I have made no remark about who will win, or what happens next, so you are trying to create an argument out of nothing. – Weather Vane Oct 06 '22 at 16:27