Citizens Advice Bureau



6.3.3.L5 / 13.10.10.L6
Overpayments to clients

Extent: Jersey
November 2000
Updated 15 September 2016

Words you may need to know


Deduction – something that is taken off eg here, money from wages

Enforce – make sure a law or obligation is put into effect; make sure it happens

Entitled - the right to have something

Error - a mistake

Beneficiary - someone who receives a benefit of something

Financial position – how much money you have

Recover - get something back

Contentious - arguable, debateable

Negotiate - an attempt to come to an agreement on something through discussion and compromise

Policy – here a way of saving money in a type of savings plan

On the strength of – in reliance on, because you believe something

Compromise - a settlement of a dispute in which two or more sides agree to accept less than they originally wanted

Written off – ‘forgotten about’; cancelled



Overpayment - If you receive money to which you are not entitled

If money has been paid to you

-          in error and

-          it was not reasonable for you to have known that it was an overpayment and

-          if the money has been spent or

-           a financial commitment entered into on the strength of the overpayment

it would not be reasonable for the money to be returned if this would put you in a worse financial position than you were in before the overpayment.

Example: If you are contacted by an insurance company who say that you might be the beneficiary of a policy of someone who has died. You did not know anything about the policy. You are asked for proof of your identity and of your relationship to the person who has died. Checks are carried out by the insurance company and after a while a payment is made to you. You spend the money and are then contacted by the insurance company who say an error has been made and there was no entitlement. They want repayment.

You do not have to pay the money back. You received and spent the money in good faith believing it was yours. To repay would put you in a worse financial position than before.

Overpayments to a bank account

If money is put into your bank account by mistake, the bank or building society is usually entitled to recover the money within a reasonable time. If you do not realise that the mistake has been made and have used the money in a way you would normally (that is, you have acted believing the money was yours), the bank or building society may not be able to claim the money back. This can be a contentious area of the law however, and you may need to seek further advice from a lawyer about your case.

If the bank or building society does have the right to recover the money, you should negotiate for small repayments over a period of time. These are called ‘staged payments’. You should not pay any interest. If the bank or building society tries to charge interest, you could either refuse to pay it or could claim it back by suing the bank or building society through the court. In practice, banks and building societies normally agree to both staged payments and no interest.

Overpayment of wages or expenses

Where an employer has overpaid you, the employer often may want to recover the overpayment by making deductions from your wages. Try and agree that the deductions are made over a period of time so that it does not cause you difficulty.

If your employer makes deduction(s) without your agreement, the employer will be in breach of the Employment (Jersey) Law 2003. This is because they will not have paid you the agreed wage for the relevant period because they have taken the deduction from your wage. Because you have not agreed the deduction it will be an unlawful deduction from your salary.

You could use the fact that there may be a breach of the Employment (Jersey) Law 2003 to negotiate with the employer the possibility of you repaying the overpayment in regular amounts that you can afford. The Jersey Advisory and Conciliation Service (JACS) may be able to assist with negotiations.

An employer may not be able legally to reclaim an overpayment where:-

  • they gave the impression that the payment was correct; and
  • you could not have reasonably realised that there had been an overpayment; and
  • you have spent the money or made other financial commitments so that if you were forced to pay the money back, you would be in a worse position than if the overpayment had not been made.

If the above circumstances apply, you could argue that under the law of estoppel you should not be required to repay the overpayment.

Estoppel is part of the law of equity. It means that although the employer can show that they are owed the money, they are estopped (prevented) from enforcing any legal right to it because the circumstances of the overpayment mean that you would be made worse off if you had to repay it.

Only a court can enforce estoppel. However, it may be advantageous to use the possibility of it applying when negotiating with an employer for the debt to be written off.