Paid wrong for 2.5 years now they wont pay up properly?

[bradfdan87]

my partner has recently discovered that over the past two and a half years she has been underpaid for every hour of overtime she has worked. Rather than paying her 1.5X her hourly rate they have been paying her at 1.5X a smaller rate by mistake. it was a mistake made on there end when she moved from temp to permanent. we have calculated the error to over £1700 before tax. it has been two weeks since this has been discovered and the company have admitted responsibility and are willing to pay. However they would like to pay the amount for this tax year to her immediately and the rest in small instalments over a period of time this tax year calculates to about£500. The reason given is it will affect there budget. bare in mind the company turnover is in excess of £250million. We understand there are complex issues to be resolved including back tax and are willing to wait a reasonable amount of time for these to be resolved but would like to bed paid owed amount ASAP rather than have to wait to help there budget. where does she stand what are her rights and what can we do if they refuse to change there mind?
Additional Details
her payslip's were not clear enough. they just showed hours worked and total pay received. we did check every payslip that she got paid the correct amount of hours for the correct rates. as the difference was only about £1 per hour it wasn't noticeable until she compared her wage slip with a colleges.

[factor-fiction]

I understand the problem from both sides. When i managed a departmental budget for salaries there was simply no scope for finding extra money in this year's budget unless someone left and we delayed recruitment.
But I think he is entitled to the money sooner rather than later.
However as it's all a bonus (in that he wasn't expecting it, not that he's not entitled to it), is it really a hardship to receive the money in instalments over a few months?
Maybe he should ask for £500 now and the rest in April?

[Whoever]

What will her tax situation be after April 5, 2011? If there are any changes in the last Government budget which could result in her being financially worse off, i.e. moving from one tax band to a higher one, then I think she has grounds for insisting that she should not be financially disadvantaged in this way through no fault of her own, and all the back pay due should be paid in this tax year.

If there is no financial disadvantage to her and the company really does have difficulty in meeting the payents in this tax year then perhaps she should be prepared to compromise.

[buildersmate]

To clarify the 'back tax' you mention:
It is absolutely impossible for the company to treat this payment as anything other than an effective one off bonus of the gross amount - they cannot back-track to reinstate for the equivalent tax AND EMPLOYEES NI (don't forget this!) that would have been due.
So the tax and NI will have to be paid in the tax year in which the payments occur - this and perhaps the next tax year - dependeing on what you negotiate.
A word of encouragement (that I'll wager no-one else will think of). If she is paid weekly, there is an upper earnings limit for NI purposes above which employees NI ceases to be paid and she will surely breach this; it means that the NI in the week she gets this extra NI will be capped.