04 August 2017 #Employment
In University of Sunderland v Drossou, the EAT concluded (departing from previous authorities) that the figure for a “week’s pay” when calculating tribunal awards should include employer pension contributions.
The Claimant had been found by the tribunal to have been unfairly dismissed and reinstatement was ordered as a remedy. The University declined to comply, so the tribunal ordered compensation as an alternative. In calculating this compensation, it included the pension contributions made by the University. The University appealed this approach.
The EAT agreed with the tribunal’s approach and confirmed a “week’s pay” should include employer pension contributions. This has the potential to substantially increase the value of a “week’s pay” used to calculate awards. In most instances, tribunal awards for a “week’s pay” are subject to the statutory cap (minimising the impact somewhat), however there are several instances where the cap does not apply including:
Consequently, employers must be particularly cautious in dealing with these types of issues. For employers who make substantial pension contributions, this decision may significantly increase the value of claims. Parties will therefore need to consider this judgment in any potential settlement discussions.