How “heavily” will the employer pay for its mistake when it mistakenly transfers money to an employee’s account?

Employers, often with several thousand employees, make several thousand payment transfers per month to employees’ bank accounts. What should be done in a situation where one of these transfers goes to the wrong recipient as it should? Does the employer have the right to claim the return of such funds and do labour laws protect the employee against such a claim?

In order to better understand the issue, we present a case study of our client’s case. All the more interesting as it had an international element, where the application of Polish law was not an obvious choice.

The employer from Sweden and the Employee from Poland had an employment relationship. The Employee performed the employment contract for approx. two months, working in Sweden under an employment contract governed by Swedish law. After two months, the Employee was dismissed. Following the termination of the employment relationship, the Employer made two transfers to the account of the obligee. The first was the salary for the previous month’s work, while the other was made by mistake for an amount approx 15 times the salary. Upon discovering the mistake, the Employer contacted the employee, informing him of the mistake and requesting him to reimburse the mistakenly transferred amount. The obligor defaulted on reimbursement and the case was referred to our law firm.

Due to the international element in this case, the first step was to determine whether Polish law had jurisdiction. After all, the parties had an employment relationship governed by Swedish law, the Employer was based in Sweden and the mistaken transfer was made by a Swedish bank.

In accordance with Article 10 of Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II):

1. Where a non-contractual obligation arising out of unjust enrichment, including undue benefit, relates to a relationship existing between the parties, such as one arising out of a contract or a tort, which is closely connected with that unjust enrichment, it shall be governed by the law applicable to that relationship.
2. Where the applicable law cannot be determined under para. 1 and the parties have, at the time of the event giving rise to unjust enrichment, their habitual residence in the same country, the law of that country shall apply.
3. Where the applicable law cannot be determined under paras. 1 or 2, the applicable law shall be the law of the country in which the unjust enrichment took place.
4. Where it is clear from all the circumstances of the case that the non-contractual obligation arising out of unjust enrichment is manifestly more closely linked to a country other than that named in paras. 1 to 3, the law of that other country shall apply.

On the basis of the aforementioned provision, we established the jurisdiction of Polish law, as in our view:

• The undue benefit did not relate to the employment relationship between the Employer and the Employee;
• The Employee submitted to the Employer his place of permanent residence in Poland – the Employer did not have any other address data concerning the Employee;
• The unjust enrichment occurred in Poland, as the transfer was made to a bank account held by a Polish bank based in the Employee’s place of residence;

This view was shared by the District Court, which, in response to the law firm’s application for security of the monetary claim, found that it had jurisdiction to rule on the case and granted security of the claim to the client, setting a two-week time limit for bringing the action.

Now the Employer is waiting in peace of mind for the funds secured by the bailiff. The law firm has drafted a lawsuit for payment and the probability of winning is high.

Can the Employer’s interests be safeguarded so effectively and efficiently in every case, and does employment law protect the Employee in such a case?

The Labour Law protects the Employee only to the extent that it prohibits the Employer from deducting a debt owed to itself by the Employer from a debt owed to the Employee (e.g. from wages). In the remaining scope, the provisions of the Civil Code, in particular Articles 405-410 of the Civil Code, apply. Particularly relevant here is the provision of Article 409 of the Civil Code, whereby an Employee does not have to return an amount mistakenly transferred by the Employer to his/her bank account if he/she has already disposed of the amount without being aware that he/she should have reckoned with the obligation to refund it. Jurisprudence practice shows an extremely “pro-employee” interpretation of this provision by Polish courts, which rarely commit Employees to return an undue benefit in situations where there is no clear evidence that the Employer informed the Employee of the mistake, clearly pointing to the obligation to return the funds. The consequences of such a mistake may therefore be severe for the Employer, especially when considering that most often the transfers are made by accounting staff and their potential liability for such a mistake will usually be limited to the threefold salary, which in the present case would not even be enough to cover 20% of the damage suffered by our Swedish Employer.

In such cases, it is therefore the speed of your reaction and professional legal action that counts. If such a mistake happens to you, do not waste a moment and contact your lawyer – in such a situation literally: “time is money”.

Author:

Katarzyna Hiller, Attorney at Law

Michał Skrzypczak, Legal Assistant