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Overpaid Employee Ordered to Repay Employer

The Employment Relations Authority (ERA) has found that an employee of Noel Leeming Group had been overpaid while they were on ACC-funded leave and ordered the employee to repay the overpayment.

The employee, Michael Saunders, had been employed since late 2017.  In December 2018 he suffered a non-work accident and was then off work until 21 March 2019.

After his return to work it was identified that he might have been overpaid an estimated $14,900 during his period of leave, which he disputed, and following mediation, where the matter was not resolved, the employer went to the ERA.

Noel Leeming Group later made Mr Saunders redundant, to take effect on 16 November 2020.

Noel Leeming Group sought a declaration via the ERA that Mr Saunders had breached his implied duty of fidelity and an order that he repay the money in full and on reasonable terms.

Mr Saunders initially participated in the ERA process.  He filed a statement in reply and participated in a case management telephone conference.  However, he then did not respond to emails, comply with timetables set to file documents, and he did not attend a second case management conference.  The parties agreed to have the matter determined on the papers.

The ERA member, Nicola Craig, said Mr Saunders had indicated that he accepted the amount claimed was owed but that he would have difficulty repaying it.

Noel Leeming Group said they had taken steps such as staying in touch with Mr Saunders and providing him with the company’s sick leave policy.  They also said they reminded him to contact ACC.

However, what is particularly interesting in this case is that when Mr Saunders returned to work, it was then noted that he had been receiving his normal salary as well as ACC payments.

When an employee is injured and their claim has been accepted, ACC start paying your employee one calendar week after the first date they have been declared unfit for work. The first week of income is covered in different ways.  If their injury happened at work, as their employer you need to pay 80% of their regular income for the first calendar week.  However, as in this case, if the injury happened outside of work, the employee may ask to use sick leave, annual or unpaid leave to cover that first week off.  Normal salary or wage payments wouldn’t usually continue.

When Noel Leeming Group then later put a hold on Mr Saunders’ pay and arranged a meeting with him, Mr Saunders questioned the legality of them doing so.  He claimed he did not realise he had been paid both his salary and ACC and he offered to repay the overpayment at $100 a month.  The company suggested full payment within two months or a repayment plan of $1000 per month to be deducted from Saunders’ salary. No agreement was reached.

Noel Leeming Group felt that Mr Saunders should have been aware he was receiving a lot more than his usual earnings (180% of his regular salary) and they questioned whether it was therefore dishonest conduct towards an employer.  However, Nicola Craig said she had no evidence to support that.

Mr Saunders’ argument in response was that he believed the company would not make a mistake.  Mr Saunders was remunerated through an incentive scheme and he said he was due commission on big projects that had come to fruition while he was on leave.  Therefore, he thought he had been paid these other payments and not his salary.

Mr Saunders felt he was doing what he had been asked to do, namely supply medical certificates to his manager.

Craig said, given the evidence of other possible payments and Saunders being on strong medication and hospitalised during his time away from work, it was not established that he had breached his duty of fidelity.

Mr Saunders was ordered to repay the $14,768.54 in instalments of $200 a month.  Costs were reserved.

Reported on, by Susan Edmunds, at 14:31, on 15 September 2020

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