Incorporating Employer Pension in Labour Cost

What are Employer Pension Contributions in Labour Calculations?

S4labour can include employer pension contributions as part of your site’s labour cost calculations providing a more accurate view of total employment costs. This supports managers, HR, and finance in understanding overall labour spend, managing budgets, and reviewing profitability.

Key Points

• Employer pension contributions are included in labour calculations when the feature is switched on for your organisation and set up for employees.

• Pension contributions are configured per employee and can be based on either qualifying earnings or total earnings.

• Pension cost figures in S4labour are estimates designed to approximate labour cost in your profit and loss, not to match payroll provider reports.

• Calculations use weekly thresholds, which may differ from monthly or annual thresholds used by payroll providers.

• Tronc is not treated as pensionable in these estimates and is excluded from pension calculations.

• Pension appears as a separate cost component in rota cost breakdowns and in accounts exports.

How to Use Employer Pension Contributions in Labour Calculations

Request the Feature to Be Switched On for your organisation

1. Contact your account manager or Customer Success representative.

2. Request that employer pension contributions are included in labour calculations for your organisation and provide a standard % rate.

3. When this is switched on, pension contributions that are configured for employees are included in labour costs on the rota, in reports, dashboards, and in exports.

Set Up Employer Pension for an Employee

1. Select 'View all Employees

   

2. Open the relevant employee’s profile.

3. Navigate to the Finance tab and click 'Pensions and Deductions

   

4. Use the toggle to enable or disable pension contributions for the selected employee

   

5. Enter the date you wish the contributions to start calculating from

   

6. Choose contribution basis:

   

   • Total earnings – contributions are based on the employee’s gross pay used for pension (excluding tronc).

   • Qualifying earnings – contributions are based on the part of pay between a lower and upper threshold defined by the UK government.

7. Enter the employer contribution percentage.

   

8. Select Save.

   

After you save, S4labour calculates an estimated weekly employer pension cost for that employee and includes it in the site’s labour calculations.

View Pension Costs on the Rota

1. Open the rota for the relevant week.

2. Schedule an employee as your normally would

3. Move your pointer over the employee’s cost value.

   

A breakdown appears showing the cost components, including a separate line for Pension with the estimated employer contribution for that week.

 

Why Use Employer Pension Contributions in Labour Calculations?

• More accurate labour cost

  • Employer pension contributions are part of total employment cost. Including them gives a clearer view of labour spend at site and area level.

• Better budgeting and forecasting

  • Labour budgets and forecasts reflect pension as well as wages, supporting more accurate planning and modelling.

• Improved transparency

  • Pension is shown as its own component in breakdowns and exports, making it easier to review, compare, and audit costs.

How Employer Pension Contributions Work (If Enabled)

When employer pension contributions are switched on and set up for employees:

• Pension contributions are included in labour calculations for employees with active pension settings.

• Contributions are calculated on one of two bases:

  • Qualifying earnings (most common) – contributions apply to the part of pay between a lower and upper threshold.

  • Total earnings – contributions apply to the employee’s gross pay used for pension (excluding tronc).

• Thresholds are applied on a weekly basis. This can differ from monthly or annual thresholds used by payroll providers, so values may not match payroll reports.

• Rota, reports, dashboards, and exports show labour costs that include employer pension contributions.

• Pension is displayed as a separate item in cost breakdowns and included in totals used for analysis.

• If a contribution end date or stop flag is reached, contributions for that employee stop in future weeks; past weeks are not adjusted.

Important: Pension costs in S4labour are estimates to support labour cost analysis. For official pension reporting and reconciliation, use reports from your payroll provider.

Key Terms

Qualifying earnings

• The part of an employee’s pay between a lower and upper threshold set by the UK government for workplace pensions.

• Includes salary, overtime, special pay, statutory sick pay, and parental pay.

• Does not include tronc within S4labour’s pension estimate.

• Contributions are calculated only on the pay that falls within this band.

For the latest thresholds and detailed guidance, see the UK Government workplace pensions guidance:
Workplace pensions

Total earnings

• All gross pay used for pension, with no lower or upper limit.

• Includes salary, overtime, special pay, and statutory pay.

• Does not include tronc within S4labour’s pension estimate.

• Contributions are calculated as a percentage of this amount.

Tronc

• A separate payment, often relating to tips or service charges.

• Treated as non-pensionable in this feature and not included in qualifying earnings or total earnings pension calculations in S4labour.

• Your payroll provider or pension scheme may treat tronc differently.

Frequently Asked Questions

Q: Why do pension figures in S4labour differ from my payroll provider’s reports?
A: S4labour uses weekly thresholds and simplified rules to estimate employer pension costs for labour analysis. Payroll providers often use monthly or annual thresholds and full pension scheme rules. For official figures and reconciliations, use reports from your payroll provider.

Q: Where can I see pension costs in S4labour?
A: Pension appears as a separate line in the cost breakdown when you move your pointer over an employee’s cost on the rota. Pension is also included in totals on reports and dashboards and appears as a separate component in accounts exports when this feature is switched on.

Q: How do I change an employee from qualifying earnings to total earnings (or the reverse)?
A: Open the employee’s profile, go to their pension settings, change the basis to qualifying earnings or total earnings, then save. Future weeks use the new basis.

Q: Is tronc included in pension calculations in S4labour?
A: No. Tronc is not included in either qualifying earnings or total earnings for pension calculations in S4labour. Your payroll provider or pension scheme may treat tronc differently.

Q: How do I get this feature switched on?
A: Contact your account manager or Customer Success representative and request employer pension contributions to be included in labour calculations. They can confirm when it is active and support you with configuration.

Need Help?

For activation, configuration support, or questions about pension costs in S4labour, contact your account manager or Customer Success representative.

For information about statutory pension rules and thresholds, see the UK Government guidance on workplace pensions:
https://www.gov.uk/workplace-pensions/what-you-your-employer-and-the-government-pay