Pension Contributions are not 'Wages'

[Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary]

Do pension contributions amount to 'wages' for the purpose of an unlawful deductions claim?

No, says the EAT in Somerset County Council v Chambers.

Mr Chambers was a social worker employed by the Council. He was a member of a superannuation scheme to which both the employer and employee contributed. He later became a locum social worker on a fractional basis. A change to the Local Authority Pension Scheme rules meant that a person could not be a member of the scheme unless he was employed under a contract of employment of more than 3 months duration. The Council suspended contributions but later re-instated them. There was a dispute about pay, holiday pay and pension contributions in the suspension period.

The employment tribunal awarded the sums claimed as being wrongful deductions from wages.

On appeal to the EAT one of the questions was whether the employment tribunal had jurisdiction to award repayment of the employer's pension contributions on the basis these were deductions from 'wages'.

The EAT held that, notwithstanding the definition in s 27 (1) (a) of the Employments Rights Act 1996 that 'wages' meant "any sums payable to the worker in connection with his employment", this did not include contributions paid to a pension provider on the employee's behalf.

An earlier case, Chambers v Cromwell Group (Holdings) Ltd (EAT 1178/98) which had suggested the contrary was wrong and per incuriam (because this jurisdiction point had not taken).