When can an employer claw-back salary paid to an employee?
Last week, the BBC’s director general, Tim Davie, stated that the corporation will “explore all options” for recovering pay from its former newsreader, Huw Edwards. Edwards had been off-air on full pay since August 2023 after allegations surfaced that he paid a young person over £30,000 for sexually explicit photos. In April 2024, Edwards resigned without notice amid a confidential disciplinary process. It later came to light that, to the BBC’s knowledge, he had also been arrested in November 2023 on suspicion of serious offences. Edwards remained employed on full pay until April 2024. After his resignation, he was charged with (and pleaded guilty to) having indecent images of children,
Public consternation is understandable, given that a publicly-funded broadcaster continued to pay Edwards while serious criminal allegations were pending, and he was not at work. However, it is worth noting that, even if the BBC had wanted to dismiss in November 2023 when Edwards was arrested, it would have been difficult. It would likely have had to be for ‘some other substantial reason’ (i.e. ‘we can’t continue to employ you when you’ve been arrested for this’). This would’ve meant a requirement to pay Edwards’s notice pay, which was likely to be at least six months and possibly a year. So, if the BBC had acted to sack Edwards earlier then these monies may have been payable anyway.
Davie acknowledged that recovering the pay now would be “legally challenging”. Under what circumstances can an employer demand repayment of salary? And do any apply to the BBC’s situation with Edwards?
- Overpayment by the Employer: Generally, if an employer overpays an employee, the overpayment should be repaid, even if the mistake was the employer’s. Employers are legally entitled to recover any salary overpayment from the employee. If the employee remains in employment this can be done by deduction from wages. If they have left employment, the employer can request repayment or issue a civil claim for recovery. However, this does not apply to the BBC’s situation, as Edwards was paid his contractual entitlement up to his employment termination date. There was no overpayment, so there is nothing to claw back.
- Prior Contractual Agreement for Repayment: Employers may have agreements requiring employees to repay certain monies if they leave employment within a specified period. These must be reasonably drafted to avoid being unenforceable penalty clauses. It is unlikely that Edwards’ employment contract included a provision requiring him to repay salary paid to him during a disciplinary investigation on the basis that that investigation (if it had been completed prior to his resignation) would have resulted in him being dismissed. Even if such a clause existed, it might be considered unreasonable or an unenforceable penalty clause. Edwards was either suspended or off work due to sickness, and the BBC never concluded the allegations before his resignation, presenting significant barriers.
If Edwards worked in the financial services industry rather than in broadcasting then the prospect of recovery would have been more likely. Pay at the BBC is heavily weighted towards salary and pension. In the financial services industry, pay is often focused on bonuses rather than salary, and regulatory rules allow for claw-back when managers fail to meet standards. For instance, ex-BP boss Bernard Looney lost over £32m after misleading his board about personal relationships. The BBC, however, is not covered by these rules, making recovery more complex.
So, good luck to Mr Davie as he considers his options here. Once an employer has properly paid salary to an employee, that money is typically gone unless there is an enforceable agreement requiring its return.