The Employment Appeal Tribunal recently upheld a ruling by the Employment Tribunal that an employer’s pension contributions should now be included when calculating a week’s pay.
Previously an employer’s pension contributions were not included when calculating a week’s pay, presumably because the pension contributions were not paid directly to the employee. However, the Appeal Tribunal held that the pension contributions should be included on the grounds that a week’s pay should be calculated according to what is “payable by the employer under the contract of employment”.
Even though an employer’s pension contributions do not go directly to an employee, they should still be included when calculating a week’s pay. This will be particularly significant for those employees that are members of a defined pension scheme, as well as those payments or remedies where the value of a week’s pay is not capped.
We advise ensuring all employees in the relevant roles who will be affected by this are updated accordingly.