I have a reasonable working knowledge of employment law, and as far as I'm aware, yes, they can demand it back. So unfair I know. Where does it leave you if you refuse to pay? Basically, in court. They should allow you to pay it back a bit at a time, deduct a percentage from your wages and so on. If you really want to try not to pay it back, take proper advice. Citizen's Advice are usually pretty good, or most solicitors will do an initial session for about �5 just to give you basic advice.