Wages to Wrong Bank Account

Wages to Wrong Bank Account

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We made a salary payment to an employee who had given us the wrong bank details. Unfortunately the details she provided were those of a legitimate account, just not hers.

We have written to both the bank and the account holder (via the bank) who was paid, and I am about to write again as we have not had this money refunded.

I am wondering whether we are obliged, given that the error was our employee's, to make a second payment to the employee or whether we are within our rights only to pay over the money as and when it is returned to us.

Thanks for help with this

Paul.

Replies (30)

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By NDH
04th Apr 2013 13:42

From what I understand the recipient is obliged to return the money however if they've already spent it might be quite difficult to get back and their bank aren't obliged to give you their details either so it is very tricky to get the money back.

I would suspect that because you have paid the salary to the bank details provided by the employee you would not be obliged to make another payment but whether you want to assist the employee to keep morale up and all that then that would be discretionary.

I would recommend seeking some professional legal advice just to ensure you are fully covered.

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By Mr Potter
04th Apr 2013 13:56

Reputation...

Whilst it is uncertain from your post, it is likely that the error has been made in good faith. Accordingly, irrespective of the technical position, the ethical course would be to make the payment.

The bank and A/C holder have no right to the money as it is (again presumably) a genuine error (recission being the remedy) and so the only qualms remaining are reputation and cash flow.

In the nicest possible way, if the firm I worked for couldn't make the payment whilst awaiting recompense I would:
a) Be irritated that my firm wouldn't help in a situation of mistake (reputation & loss of morale)
b) Worry that the cash flow position was so poor that it couldn't stand to honour my payment whilst rectifying the mistake! (cash flow)

Hope this helps. Good Luck!
HP

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Replying to JCresswellTax:
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By The Black Knight
10th Apr 2013 15:25

Wonderful

Mr Potter wrote:

In the nicest possible way, if the firm I worked for couldn't make the payment whilst awaiting recompense I would:
a) Be irritated that my firm wouldn't help in a situation of mistake (reputation & loss of morale)
b) Worry that the cash flow position was so poor that it couldn't stand to honour my payment whilst rectifying the mistake! (cash flow)

I would be worried that the employee had competence issues not being able to copy from one document to another and not bothering to check either.

A real disaster in an admin or accountancy role?

It's really the employees own stupid fault and no ones problem but theirs.

Simply that is where the money was requested to be sent and that is where it went, how do you know it wasn't their Mums account?

It would be a fantastic way of scaming another months money?

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By johngroganjga
04th Apr 2013 14:00

Yes I agree that strictly speaking you are not obliged to pay the wages again, but, provided always you are satisfied that the employee acted in good faith, in practice you might well want to.

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By henry williamson
04th Apr 2013 14:41

How...

 

...did the employee know the other person's bank account details?

Were they a friend, partner or relative?

Might make a difference to whether you should pay them a second time.

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By Ned Ludd
05th Apr 2013 00:36

No Henry
I think the opening poster was saying that the bank details given were incorrect but unfortunately just happened to be someone else's actual details.

I.e. a complete stranger not someone the employee knew.

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By PaulMM
05th Apr 2013 08:48

Thanks for all your responses. In answer to some questions, I have no evidence that the bank details provided were deliberately incorrect, but they are totally different from the new account details I have, not just a slip of one digit or a transposition.

My thoughts are currently that I will pay the money again to the employee, but only after receiving assurance in writing that the bank account was not an old account of the employee's, and that they will assist in any attempts to recovver the money paid to the wrong account.

 

Thanks again

 

Paul

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By User deleted
05th Apr 2013 09:42

Totally different?

I'd be waiting till the money came back. A digit or wrong sort code yes. Totally different, smells off

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Euan's picture
By Euan MacLennan
05th Apr 2013 11:42

Agree with Henry & Flash

You don't give a completely wrong account number or sort code by accident.  The employee must have given the details of an account which s/he knew and hence, must know the payee.  If s/he is telling you otherwise, s/he has not acted in good faith.  It is not all that uncommon for an employee to specify someone else's bank account to receive their wages.  You might want to interrogate the employee to find out how s/he came up with completely wrong account details, but it is not your problem.  Do not pay the wages again.

 

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By johngroganjga
05th Apr 2013 14:48

 I agree. Clearly not a slip

I agree. Clearly not a slip of the pen. Proceed on the basis that the employee must know more than she is letting on until the contrary is proved to your satisfaction.

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By petersaxton
06th Apr 2013 19:42

Mistake or deliberate?

My view is that it could well be a mistake.

If I was the employer and had paid somebodies wages into an account that the employee had requested i would think it is the employee's fault and they should suffer the consequences. I would write to the bank of the account holder and try to obtain a repayment but I certainly wouldn't pay the wages a second time.

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By metheridge.rydon
10th Apr 2013 11:36

Account name incorrect

My understanding is that if the name of the account holder quoted with the payment details differs from those of the account to which the money is credited, the recipient bank is at fault and is obliged to make a repayment. It is not clear if this is the case here or not. If it is I would ask a lawyer if my understanding is correct.

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By john cottam
10th Apr 2013 12:34

Wrong account

I agree, the name on the account being credited must have differed from the payment details. The bank therefore surely has some responsibility to at least assist in retrieving the cash

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By Democratus
10th Apr 2013 12:58

That's why i insist on employees giving us the details in writing. We pay to the account suggested by the employee. Error's by employees are that and only that, not our fault. We would assist the employee in retrieving if possible but no more.

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By AddsUP2Me
10th Apr 2013 13:34

Trying to think

of a scenario  where I would accidently give someone elses bank details rather than my own in error. Has the employer checked the employees identification that they gave when being taken on? Are they who they say they are at all?
I'd ask for a passport or picture driving licence if I didn't have one.
 

 

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By David Gordon FCCA
10th Apr 2013 14:56

Been there worn the Hair shirt

There are two seperate points.

1)

 If the recipient has been advised through their bank and has not returned the cash, it is theft. Advise the recipients bank that you and the employee concerned are reporting this theft to the police. the bank must reveal to the police the name of the thief.

And tell that bank that if they do not help you recover the money you will complain to the banking ombudsman. Nevertheless it will be a real pain in [***] to deal with.

2) This is not really an accounting question is it?

OK, the guy gave you the wrong bank details, and you have paid to that account in good faith. Based on my direct personal experience it is that person's legal responsibilty to recover his or her own money- it was his or her error. The payer/you  has acted entirely appropriately by correctly paying to a designated account. Note: this more often occurs where the customer has previously been paying a supplier through e-banking. Then the supplier changes bank details but does not make sure that the old account is properly closed and that the customer is clearly advised.

"Ledger clerks" frequently log bank details onto ledger records, and then forget about it.

Nevertheless what you actually do depends on your employer/employee relationship. If you value the employee, why not make a formal repayable (secured) loan to him or her to allow the person to pay his or her rent and grocery, and then jointly deal with the recovery.

If you do not value the employee tell him or her to personally deal with it.

Do not let the police put you off.

 

 

 

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By David Gordon FCCA
10th Apr 2013 15:04

Part 2-Names on bank accounts

With e-banking transactions

 My experience is names on bank accounts are often really just "information" and not identifying data.

Banks' computers process data throught the sort code and account number.

 vide the disgraceful fact that a clearing bank cannot for bank certificate purposes trace a unique limited company name's bank account through the name only, but require the account number and sort code

Which if you think about it, makes the request for a bank cert a pointless exercise.

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By David Gordon FCCA
10th Apr 2013 15:16

slagging off employees.

 Really, dear  fawltybasil, slagging off employees is a fruitless exercise, and says more about the quality of the employer/manager than of the employee.

 These things happen. It is called real life. I would be more concerned (if God forbid the recipient was a genuine villain) that your account details have been passed round the town.

 

 

 

 

 

 

 

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Glenn Martin
By Glenn Martin
10th Apr 2013 15:18

Can you not retreive the payment

we can retreive the payment through our on line banking facility.

I think the recieving has to agree that the money was not theirs but it takes about 5 days to come back into the account.

If the error was down to the member of staff giving duff details i would wait until company was re imbersed before they were paid.

If it was my own staff doing the payroll who keyed the details in wrong then I would issue a payment and seek to recover the money back from the bank.

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By Carolynne
10th Apr 2013 17:35

I had this happen in a company that I provided payroll services for.  In this example, the person was A Smith for example, sort and account number given.

Because the name didn't match the account number used in the BACS payment, the bank rejected it at the other end.

It isn't your mistake, and above all else anyone has said, although ethically you should make a payment to the employee, if it was my business and my money, i would show willing and as it wasn't my fault either, take a 50/50 blow each until the funds are returned. 

if it was intentional, you are at least only having to pay half the funds out again.  I really think this to be fair.  Why should the employee expect you to suffer all the blow when it was their error in the first place.  This is of course, just my own opinion as i don't know the legal aspect of it all.

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By adjadj
10th Apr 2013 18:03

How long has the employee worked for the company?

If this was an existing employee who is known to the company then I would be minded to replace the payment. If it was a new employee I would sub then something but not repay in full until the payment had been returned. Once returned I would ensure a rapid payment was made to the employee

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By adjadj
10th Apr 2013 18:23

Banks use account numbers not names

Faster Payments (FPS) and BACS are netting off payment systems that are fully automated with no human intervention. They rely on sort code/ account numbers. Once a FPS payment is entered into the system it cannot be retrieved automatically (this streamlining enables same day turnaround times). As BACS is not instant errors can be recalled within a limited timeframe. In both case the sixteen digit reference is used to allow the recipient to route the payment internally: e.g. route to a specific credit card account. In neither case is the account name included in the interbank record.  CHAPs is a very different with each payment being settled individually and these usually have human intervention within the process - hence the £25-£40 charge.  CHAPS payments of any size may have 'four eyes' checking to trap mistakes. Banks would only be liable if they had entered data incorrectly.

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Giraffe
By Luke
10th Apr 2013 19:28

This happened to me in a previous job, the new chief exec gave the wrong bank account details although only one digit wrong so more plausible.  We paid him again (after all he was the boss!) then got Lloyds to trace the payments (first payroll payment and one expense payment).  It took about 6 weeks for us to have the funds refunded but got there in the end.

 

The fact that in my case, the boss was later sacked for fraudulently claiming expenses amongst other things is neither here nor there, but in your case I do agree it is suspicious that the details are totally different.

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By dunkers012001
27th May 2013 21:16

I have a friend who had a lodger for a while he paid his wages into her account and she withdrew them for him he also failed to pay her rent and left a couple a months ago now recently he has had some more wages paid into her from his employer and he wants the money back she says shes going to keep it as back payment for rent he owes but secondly some of it has been taken in an overdraft she had is this fraud if she keeps it? mind you she is angry for him even using her bank details after so long help please thanks

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By petersaxton
27th May 2013 21:59

fraud?

How can it be fraud if she didn't ask it to be paid into her account?

If somebody owed me money and somehow their money came into my account I would keep what was owed.

 

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Replying to dz651:
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By dunkers012001
28th May 2013 20:46

thanks for your comments i must admit im at a loss as to how it can be fraud i prob think he should be done for fraud!!!! on this occasion he didnt have permission to use her account details  anymore info be appreciated thanks

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By Democratus
29th May 2013 12:48

clearly there was agreement on the use of the account or the landlady would have stopped it immediately. Not sure legally what the correct issue is, but if it were me I'd keep any owed rent, any reasonable admin fees and if there was anything left offer it. What's the ex lodger going to do, sue for it, certainly the landlady has grounds for defence, i.e. owed money.

Dun Dun Dah! Unless the landlady wasn't declaring income on her SATR, then it's a fight to the death......no stop it imagination, need a sandwich, brain failing....

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By dunkers012001
29th May 2013 17:06

it was only rent owed for one month he failed to pay now it turns out that he says its nothing to do with him anymore because its the error of the employer now obviously we dont know if he gave other account details to his employer and they just used the one they still had on file but now the landlady has paid 100 back to the employer as he is threatening her and says if she doesnt pay its fraud helpppppppppppp

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By petersaxton
29th May 2013 17:58

Help?

What help do you need we have given you all relevant advice.

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By Democratus
30th May 2013 08:48

What's the problem?

Landlady has returned the money; what fraud? There was implied if not actual complicity in using the landlady's bank account.

 

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