Should a week’s pay be calculated to include employer’s pension contributions, asks Charles Pigott
- The EAT has ruled that the statutory definition of a week’s pay extends to employer’s pension contributions.
- This decision challenges a long-held orthodoxy that only gross pay should be taken into account when making the required calculations.
In Drossou v University of Sunderland UKEAT/0341/16/130 Mrs Justice Slade has surprised many in the legal community by holding that a week’s pay can include employer’s pension contributions. In this case the calculation of a week’s pay was required to determine the upper limit on the compensatory award for unfair dismissal, but her reasoning is capable of applying to all jurisdictions which use a week’s pay in order to compute employment tribunal awards.
Some industrial relations history
It seems that old orthodoxy about the calculation of a week’s pay can be traced back to a 1993 decision of the Court of Appeal in Port of London Authority v Payne [1994] IRLR 9. The underlying dispute concerned the redundancy of 17 dock
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