Your Employer Has Stopped Paying Pension Contributions
If your employer has failed to make pension contributions, this may be an unlawful deduction from wages under ERA 1996 s.13 and a breach of auto-enrolment duties under the Pensions Act 2008. The Pensions Regulator has enforcement powers.
Quick Answer
An employer's failure to pay pension contributions can constitute an unlawful deduction from wages (ERA 1996 s.13), and — if you are an eligible worker — a breach of auto-enrolment duties under the Pensions Act 2008. The Pensions Regulator (TPR) can investigate, issue compliance notices, and impose fixed penalty fines. You can also bring an Employment Tribunal claim for unlawful deduction from wages within three months less one day of the deduction.
Full Explanation
Employer pension contributions are part of your contractual remuneration. If your contract of employment or a collective agreement specifies that the employer must make pension contributions, failure to do so is a breach of contract and may also amount to an unauthorised deduction from wages under ERA 1996 s.13 — which covers any deduction not authorised by statute, by the contract, or by the employee's written consent.
Since the introduction of auto-enrolment under the Pensions Act 2008 (fully phased in by 2018), all employers must enrol eligible workers (broadly, those aged 22 to state pension age earning above the threshold) into a qualifying workplace pension scheme and make minimum employer contributions. The minimum employer contribution under auto-enrolment is currently 3% of qualifying earnings, with total minimum contributions of 8%. Failure to make these contributions is a criminal offence and a regulatory breach enforceable by the Pensions Regulator.
The Pensions Regulator (TPR) is the statutory body responsible for enforcing auto-enrolment compliance. TPR can issue compliance notices requiring the employer to remedy the breach within a specified period, unpaid contribution notices requiring payment of contributions due, and fixed penalty fines of £400 for failure to comply with a compliance notice. Escalating penalty fines of between £50 and £10,000 per day (depending on employer size) apply for continuing non-compliance. TPR also has the power to prosecute employers for wilful non-compliance.
Your remedy in the Employment Tribunal for unlawful deduction from wages is straightforward. You must have raised a grievance with the employer first under the ACAS Early Conciliation regime, and you must bring the ET1 claim within three months less one day of the deduction (or the last in a series of deductions). The Tribunal can order repayment of the sums unlawfully deducted.
Always check your payslips carefully. Under ERA 1996 s.8, employers must provide an itemised payslip, and this should show any deductions. If pension contributions are not being remitted, the pension scheme administrator should be able to tell you — check your pension account online.
Legal Basis
- §Employment Rights Act 1996 s.13 — Unauthorised deductions from wages
- §Employment Rights Act 1996 s.8 — Itemised pay statements
- §Pensions Act 2008 — Auto-enrolment duties
- §Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010 (SI 2010/772)
What To Do
Check Your Payslips and Pension Account
Compare your payslips with your pension scheme's online account. Payslips should show any employee contributions deducted. If contributions are shown as deducted but not appearing in your pension account, the employer may be taking deductions but failing to remit them — a potentially more serious matter.
Ask the Employer in Writing
Write to your employer (or HR department) by email, asking them to confirm when the last pension contributions were paid, why payments have stopped, and when they will resume. Keep a copy of the letter and any response.
Report to the Pensions Regulator
Report the non-compliance to TPR using the online whistleblowing service on their website. TPR can investigate and take enforcement action including issuing compliance notices and penalty fines. You can report anonymously if you wish.
Contact ACAS and Start Early Conciliation
Before bringing an Employment Tribunal claim for unlawful deduction from wages, you must notify ACAS and undertake Early Conciliation. This is a mandatory step — the ET1 form cannot be submitted without an ACAS EC reference number.
Submit an ET1 Claim if Not Resolved
If the matter is not resolved through ACAS Early Conciliation, submit an ET1 claim to the Employment Tribunal for unlawful deduction from wages. The time limit is three months less one day from the deduction (or last deduction in a series), extended by the EC period.
Important Deadlines
Important Warnings
If the employer has deducted employee contributions from your pay but failed to remit them to the pension provider, this may constitute fraud — report it to both TPR and the pension scheme immediately.
The three-month time limit for ET claims runs from the date of each individual deduction — do not delay in bringing your claim.
Resigning over unpaid pension contributions may give rise to a constructive dismissal claim, but only if the breach is sufficiently serious and you act promptly — take legal advice before resigning.