Repetition of undue payments

Repetition of undue payments

Agora #88
Pages 37 - 39

The recovery of undue payments is one of the fundamental principles of the law of obligations: anyone who has paid an amount to someone without legal cause is entitled to demand repayment.

The recovery of undue payments is one of the fundamental principles of the law of obligations: anyone who has paid an amount to someone without legal cause is entitled to demand repayment. It is therefore a question of ‘returning the money to the sender’. This principle, which seems simple at first sight, can, however, lead to a headache when it comes to applying it in European civil service law.

Throughout their career, employees have to update their personal data or apply for things to which they are entitled under the Staff Regulations. In this respect, they have a duty of care and it is essential that they are vigilant in the event of any change in their family, personal, housing or other circumstances, as such a change may result in a reduction or withdrawal of rights previously enjoyed.

Through the statutory link that binds him/her to the Union, the official or staff member (1) is granted a certain number of individual rights. These include, in particular, allowances for dependent children or school fees, invalidity or seniority pensions, unemployment benefits, or the reimbursement of removal, travel or medical expenses.

As soon as an employee starts working, he or she is required to actively participate in the transmission of information that is supposed to enable the administration to establish these rights (2). Once the forms have been filled out, the administration is responsible for establishing the first rights, according to the concrete and factual situation demonstrated.

The cases that arise for the administration are diverse and varied in the very specific expatriation context in which the European civil service operates. It is therefore not uncommon for the staff of the various departments responsible for establishing one or another individual right to make a mistake in applying the rules and to attribute an entitlement in an unjustified manner. It is also not unusual for such errors to be detected several years after payment.

In practice, as soon as the administration becomes aware of the error, it notifies the person concerned and asks for his or her comments on the situation. Then, if the money is still being paid, a first decision to cancel the right for the future (sometimes even with retroactive effect) will be adopted. Finally, a second decision (3) will follow through which the reimbursement of the amounts unduly paid will be claimed.

The risk for the staff member lies in the possibility of having to justify factual situations years after the erroneous payment (4). Indeed, Article 85 of the Staff Regulations creates a right for the administration to demand the reimbursement of sums paid sometimes for years, or even since the staff member entered the service, if it is considered that the staff member deliberately misled the administration. This risk can sometimes involve considerable sums (5) .

[1] Hereinafter referred to indiscriminately as “staff member”, including the former official or staff member whose activity within the Union has definitively ceased.

[2] The first aspects that must be determined are the place of recruitment, the place of origin, the place of habitual residence, the marital status, the composition of the household, the nationality, etc., which will be used to establish the individual monthly rights established through the salary slip.

[3] Sometimes even several successive notes.

[4] The subject of choice for this risk is the expatriation allowance (IDE of 16% of the basic salary), which would have been wrongly granted on the basis of the misinterpretation, at the time of entry into service, of Article 4 of Annex VII to the Staff Regulations, a subject in which presumptions are legion.

[5] Thus, the undue payment of an EDI over 5 years can represent 80% of a basic annual salary.

Such restitution is only authorised if the administration proves that one of the conditions set by the Staff Regulations has been met: either the beneficiary had actual knowledge of the irregularity of the payment, or the irregularity was so obvious that he or she could not have failed to have knowledge of it. These conditions will be examined on a case-by-case basis, depending on the circumstances of the undue payment.

In order to judge the obviousness of the irregularity, it will be necessary to prove that a ‘normally careful’ staff member who is deemed to know the rules governing his or her salary could or should have detected the irregularity (6) . For this purpose, the administration may rely on the grade, the level of responsibility or the seniority of the civil servant (7) . It may also take into consideration the “degree of clarity of the provisions of the Staff Regulations laying down the conditions for granting the allowance and the significance of the changes which have taken place in his personal or family circumstances, when payment of the sum at issue is dependent on the administration’s assessment of such circumstances” (8) .

The staff member cannot be required to be so meticulous as to have been able to determine the precise extent of the administration’s error. However, this does not mean that the staff member does not need to make any effort to reflect or check. At the very least, he must have had sufficient doubts about the validity of the payments in question to report them to the administration so that it can carry out the necessary checks validity before confirming the granting of the right (9).

The Staff Regulations set the period of limitation for the right to recovery of undue payments at five years, which was considered to provide sufficient legal certainty (10) , which is essential when a situation, although irregular, has been consolidated over time.

However, there is an exception to the statute of limitations: the bad faith of the staff member. This is the case of a staff member who has falsified documents, lied about his civil status, or generally deliberately failed to communicate all the useful and proven information for the correct establishment of a right for the sole purpose of collecting it. In such cases, an administrative investigation and disciplinary procedure will have to be initiated by the administration in order to demonstrate the wrongful behaviour of the staff member.

The staff member will be notified and must keep, for each granting of rights, the documentation proving the basis for the entitlement until at least 5 years after the end of his/her service in the Union. They should also take care, depending on their situation, to benefit from the practice of limiting to a certain percentage of a staff member’s remuneration the deductions made from their emoluments (11).

It is certainly worthwhile to conclude with a warning. The administrations, when they implement the recovery of undue payments, do not follow a procedure with identical steps. There is a great deal of confusion in this area and it is sometimes difficult to understand which of the notifications constitutes an act adversely affecting the official within the meaning of the Staff Regulations, which set in motion the three-month period within which the official may lodge a complaint. It is therefore best to ascertain the legal consequences of a notification immediately upon receipt in order to avoid any unpleasant surprises.

[6] CJEC, 11 July 1979, Broe/Commission, 252/78, préc., pt 13.

[7] CFI, 2 March 2004, Di Marzio/Commission, T-14/03, pt 91.

[8] TEU, 27 February 2015, CESE/Achab, T-430/13 P, pt 31 and cited case law.

[9] TPI, 29 Septembre 2005, Thommes/Commission, T-195/03, pt 124 and cited case law.

[10] Despite the retrospective effects of a recovery of undue payments.

[11] However, this practice is refused if there is no compensation situation, notably because the staff member concerned no longer receives any remuneration from the Union.

Maître Nathalie de MONTIGNY

About this Author

She is a specialist in European civil service law. She also advises and assists her clients in economic law. In 2018, she founded her law firm LEXENTIA. She also organises various conference cycles on national and European law for the benefit of the staff of the European Institutions.