earningsBasis

This field describes which of the employee’s earnings are used for calculating their pension contributions. The value is set when the worker group is first created and cannot be altered subsequently. The meanings of the allowed values are as follows:

Qualifying Earnings

Contributions should be calculated on earnings between amounts that are set each tax year, and that have an upper and lower level. Contribution amounts are calculated from pay between these levels. It is made up of the following components of pay: salary, wages, commission, bonuses, overtime, statutory sick pay, statutory maternity pay, and ordinary or additional statutory paternity pay and statutory adoption pay.

Set 1: Pensionable Earnings

Contributions should be calculated on the pay on which an employer bases their pension contributions and should include basic pay as a minimum.

Set 2: Pensionable Earnings

Contributions should be calculated on the pay on which an employer bases their pension contributions which should include basic pay as a minimum. Taking account of all employees to whom this contribution basis applies, the average basic pay must always be at least 85% of the average total pay.

Set 3: Total Earnings

Contributions should be calculated on the total earnings, including salary, wages, commission, bonuses, overtime, statutory sick pay, statutory maternity pay, ordinary or additional statutory paternity pay and statutory adoption pay. Other pay components can be included and this list is not exhaustive.

Fixed Amount

Contributions should be calculated as the higher of

• the minimum fixed monetary amounts included in the employeeContributionAmount and employerContributionAmount fields
• the applicable auto-enrolment minimums

That is, if the fixed monetary amount is less than auto-enrolment minimums, the auto-enrolment minimums take precedence.

Payroll software should ensure that the worker group settings are used to calculate contributions for each employee in the worker group.

For more information, take a look at The Pensions Regulator’s website.