Overpayment and Novopay

Wednesday March 20th, 2013

Last month I identified who had the legal status the liable employer in the Novopay school staff pay debacle. I noted that as recently as 2012 the Employment Court ruled that the Board of Trustees alone is the employer.

Therefore Novopay and the Government are not parties to the employment relationship. They owe no duty to school staff. The guarantee of correct and timely payment of salary and other payments to school staff is an employer responsibility for which Boards of Trustees alone are liable under their employment agreements with staff.

This gets interesting when it comes to a recent issue to come out of the long running Novopay saga. Novopay were apparently seeking to exercise the right to recover overpayments of wages to school staff.

The right to recover wages overpayments is strictly controlled by the Wages Protection Act 1983. Section 6 of the Wages Protection Act only permits recovery of wages in a specified manner. More importantly, it only permits employers to recover overpayment of wages. Novopay does not have any right to recover wages as it is not an employer. Only a Board of Trustees has the legal right to recover wages overpayments from school staff who have been overpaid.

Debt collection agencies cannot recover overpayments of wages unless they strictly adhere to the procedures set out in section 6 of the Wages Protection Act which, in this case, requires they hold the authority to act for each separate Board of Trustees.

Even then they would need to adhere strictly to the notification and deduction requirements of section 6. This is because, since the Wages Protection Act specifically provides a statutory process for the recovery of overpayments, it is most unlikely that any other debt or recovery process outside the procedures set out in the Act will be lawful or enforceable in the Court.

Copies of the relevant sections of the Act follow.

Wages Protection Act 1983

4 No deductions from wages except in accordance with Act
Subject to sections 5(1) and 6(2), an employer shall, when any
wages become payable to a worker, pay the entire amount of
those wages to that worker without deduction.

6 Employer may recover overpayments in certain
circumstances
(1) In this section,—
next pay day, in relation to any overpayment, means the day
next following the day on which that overpayment was made
upon which the worker to whom it was made would, in the
normal course of events, be paid
overpayment means any wages paid to a worker in respect of
a recoverable period
recoverable period, in respect of any employer and any
worker, means a period in respect of which that employer is
not required by law to pay any wages to that worker, by virtue
of that worker’s having—
(a) been absent from work without that employer’s authority;
or
(b) been on strike (within the meaning of section 81 of the
Employment Relations Act 2000); or
(c) been locked out (within the meaning of that subsection);
or
(d) been suspended.
(2) Notwithstanding anything to the contrary in any collective
agreement within the meaning of the Employment Relations
Act 2000 but subject to subsection (3), an employer who has
made an overpayment to any worker may recover the amount
of that overpayment from any wages to the payment of which
by that employer that worker subsequently becomes entitled.
(3) No employer shall recover an overpayment under subsection
(2) unless—
(a) by virtue of the methods or equipment normally used
by that employer in arranging the payment of, or paying,
wages to the worker concerned, it was not reasonably
practicable for that employer to avoid making that
overpayment; and
(b) before recovering that overpayment, that employer
gives that worker notice of that employer’s intention to
recover it; and
(c) that notice is given—
(i) not later than 10 days after the next pay day, in the
case of a worker who has no fixed workplace:
4
Reprinted as at
1 July 2003 Wages Protection Act 1983 s 7
(ii) not later than the first day upon which that worker
attends that worker’s workplace after the next
pay day during normal working hours, in the case
of a worker with one fixed workplace who did
not attend that workplace during normal working
hours on the next pay day:
(iii) not later than the first day upon which that worker
attends one of that worker’s workplaces after the
next pay day during normal working hours, in the
case of a worker with 2 or more fixed workplaces
who did not attend any of them during normal
working hours on the next pay day:
(iv) not later than the next pay day, in every other
case; and
(d) that overpayment is recovered not later than 2 months
after that notice is given.
(4) The validity of a notice purportedly given under subsection
(3)(b) shall not be affected by the fact that—
(a) it does not specify the amount of the overpayment concerned
but specifies only the day on which that overpayment
was made and the actions that led to its being
an overpayment:
(b) it is one of a number of identical notices given to a group
of workers to only some of whom an overpayment has
been made, and provides that it applies to the worker
to whom it has been given only if an overpayment has
been made to that worker.
- Phillip de Wattignar

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