The EAT in Somerset County Council v Chambers UKEAT/0417/12 confirmed that pension contributions are excluded from the definition of “wages”. Therefore, a claim for underpaid employer pension contributions would most likely be brought as a breach of contract claim. The claimant can choose to bring a breach of contract claim in either the industrial tribunal or civil courts.

However, tribunals only have jurisdiction to hear claims for breach of contract where employment has been terminated. Therefore, a ‘former’ employee would be able to bring a breach of contract claim in the industrial tribunal provided the claim is brought within any time limitation. Usually, the limitation period for bringing a breach of contract claim in the courts is six years whereas an employment tribunal is lower at three months. Such a claim in the tribunal is effectively a common law claim for breach of contract and is therefore subject to the rules relating to mitigation of loss.

Nevertheless, recovery of underpaid employer pension contributions may be restricted under the governing scheme rules. In particular, rules may provide that beneficiaries would not be able to claim arrears beyond a certain period (usually six years). Specific advice should be sought on this aspect.