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Hi, I received a bursary payment from my current employer

Answered by:Ben Jones
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Customer Question

Hi,

I received a bursary payment from my current employer in the 2011/12 tax year of £2000. Part of the bursary agreement stated that if I left the company the bursary must be paid back in full. I have asked my employer to take part of the bursary payment from my final salary and the rest I will make up with a cheque. However they have stated they what a lump sum payment of £2000 and until that is received my final salary will be withheld.

Here is the part of the contract which refers to repayment:- "Such sums as may fall due to the Employer by reason of this Agreement may be recovered by the Employer in whole or in part by deduction from payment of any sums die to the Employee or such by other means as the Employer deems necessary, including but not limited to, an action for debt against the Employee."

I feel the employer is being unreasonable and unlawful by stating they will withhold my final salary. I have spoke with HMRC and ACAS and both say part of the bursary payment can be taking (pre-tax) from my final salary.

I personally believe my employer is being unreasonable however I need to know where I stand legally as he has stated failure to pay may result in debt collection.

I have a series of emails from the employer if you require them

Optional Information:
Province/Country relating to question: UK

Already Tried:
Speaking directly with the employer, and confirming information with HMRC and ACAS

Submitted: 303 days and 10 hours ago.

Category: UK Employment Law

Value: £36

Status: CLOSED

Accepted Answer

Expert: Ben Jones replied 303 days and 9 hours ago.

Ben Jones : Hello and thank you for your question, which I will be happy to assist you with. Under law, an employer can only make deductions from, or withhold an employee’s wages in the following limited circumstances:1. If it is allowed under law (e.g. to deduct tax);2. If it is to recover an earlier overpayment of wages made by the employer; or3. If the employer has the employee’s express written agreement to make the deductions. If the situation does not fall within one of the above exemptions the deductions will most likely be unlawful. In your case thee is a specific agreement in writing that states the bursary, or part of it, can be withheld from any sums legally due to you, such as your salary. Therefore the employer will be acting lawfully if they were to withhold all or part of your final salary to cover the money you owe them. What you have not mentioned is whether the money needs to be repaid in one lump sum, so you could still argue that part of it should be allowed to be paid by cheque. However this will be a negotiation between you and your employer.

Customer :

I'm happy for the employer to withhold all of my salary and to put this towards payment for the bursary. The outstanding balance I will then made up via a cheque. The Employer however does not want to do this.

Customer :

This is the message he sent me:-

I have spoken to our advisors and they have confirmed that our position on this matter is entirely correct - it is indeed our choice as to how the £2,000 is paid back and we are under no obligation to either you or HMRC to pursue any alternative actions or to provide any explanations, legal or otherwise. As previously stated, if you feel that you will be out of pocket due to taxation, you will have to take that up with them, once both the £2,000 has been re-paid to us and your subsequent final salary has been paid upon completion of your employment here.

Customer :

Also

As already stated, our position remains clear – it is our prerogative to choose how the money is paid back to us. Your legal advisors seem to have not noticed that the section to which you refer uses the word ‘may’ as well as the phrase ‘by such means as the employer deems necessary’. If you feel that the sums involved are so large to make it worthwhile pursuing a legal action against us via your solicitor friend then that is of course your prerogative. As this entire situation is as a direct result of your breaking the contract in the first place, I would have thought that your friend or the ACAS rep would have advised you that such an action could not succeed.

I will correspond no more on this matter. Our position is quite clear, legal and quite proper. You must repay the £2,000 bursary in full as already agreed, in advance of your final salary being paid upon completion of your employment. This payment to us must be in whole and received in to our bank account as cleared funds before your final salary will be processed, in the normal manner.

In response to your implied threat, I now am forced to add that failure to comply with this request will result in immediate legal action to recover all debts relating to the breached contract, along with all associated costs.

Ben Jones : Ok so what are they gong to do if the final salary is not enough to cover it - sue you for the remainder?

Customer :

I assume so...My final salary will be in the region of 1200 after holiday deductions. So I would then make up the remaining 800. However the employer isnt unwilling to do this, they just want the full amount before they release my salary which seem unreasonable to me. What do you recommend I do?

Ben Jones : Seems totally unreasonable. If they withhold your salary and then you make up the difference straight away and they incur no losses then that should be the end of the matter. If they refuse this and then go on to sue you the would just be an abuse of the legal process and I can't see the courts being impressed with their actions. How've, if you are in a position to pay the balance straight away then ask for your final pay and then use that plus the balance by cheque to pay them. If they refuse to pay your final pay then simply state that you assume they have withheld it to pay part of the bursary and send them a cheque for the remainder

Customer :

Yes I think that is probably the best course of action. Let them keep my final salary and I'll make up the remaining balance. I just dont want to be the position of paying tax on my final salary and then paying the full bursary back as I'll be out of pocket.

Ben Jones : Not quite sure how the tax position would work as it is a tax query which is separate to employment law I'm afraid

Customer :

I have spoke with the tax office and it shouldnt be an issue. Anyway thank you for your time ben

Ben Jones : My pleasure. Unless you need further help, I would be grateful if you could please quickly click to rate the service I have provided you with before leaving and choose one of the following options: OK Service, Good Service or Excellent Service. If you feel the need to leave a lower rating, please reply to me first with any further questions you have. I will be happy to assist further and clarify anything you need me to. Thank you