Asked to pay back SMP due to administrative error

Last year I started my maternity leave.  At the time I had been continuously working for this employer for nine years. For the last few years I had been working part time. At the beginning of my pregnancy I was involved in a car accident and as a result suffered problems with my lower back so prior to my qualifying week I missed a few shifts.
I had provided my employer with the correct notice and proof of my pregnancy. I never received a confirmation letter from my employer or had any conversation about this, but later we established my leaving date and so on. So from my point of view everything was fine. I started receiving monthly SMP payments once I began my maternity leave. Recently I decided not to return to work and handed in my notice. A couple of weeks later I received a letter from my employer saying that they had made an administrative error and as a result miscalculated my wages in the qualifying period and now after over a year it turns out that I wasn’t entitled to SMP in the first place as at the time I was earning £99 on average per week. My employer is demanding £6,138 to be paid back and as a gesture of good will will allow me to pay it in instalments. The SMP monies have been spent in a good faith in the period of over a year as  I wasn’t aware of this administrative error. If I had known about it I would have claimed Maternity Allowance. Now I cannot claim MA as it is too late and the payments can only be backdated by up to three months. So if I pay SMP back to my employer I will be left out of pocket without any maternity payment at all.  My employer never issued SMP1 form so officially my SMP was not refused. Do I have to pay SMP back to him? Can I be penalised for my employer’s errors?

For an individual to qualify for SMP then their weekly earnings, should be, on average, at least £112 a week. From what you state in your question it appears that you fell below this threshold due to the car accident and other illness. As you state, you did submit the correct notice and proof of your pregnancy to your employer and began receiving the SMP payments in good faith and their administrative error has now left you in a position where they claim you owe them £6,138. You also note that the employer failed to provide you with an SMP1.

You should review your contract of employment and any company handbook/policy documents. Without a contractual provision or other agreement allowing your employer to deduct the overpayment from any payments owing to you, any deduction from a worker’s wages will be in breach of contract. Where there is no contractual provision (or where there are no further payments owing to you from which your employer can recover the overpayment), your employer may pursue the matter in the courts, relying on the common law remedy of restitution based on a mistake of law or fact. Your defence to such a claim would be change of position i.e. where you can show that you have changed your position to your detriment (usually by spending the money).

Due to the sums of money involved and the complexities of the situation I would suggest that you seek further legal advice regarding your specific situation as a matter of urgency.

Should you require any further clarification on the above points then please contact Tracey Guest on 0161 672 1425.

*Helen Frankland has assisted in answering this question.


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