It’s important to understand the difference between ‘Backpay’ and ‘Backdated pay awards’ as they need to be completed differently within your MCR submission.

Here’s some helpful reminders of the process for each.

Backpay

• Arrears due to backdated changes in a member’s employment circumstance, for example an increase in hours or additional responsibilities like TLR’s
• Classed as late notifications, where the member must agree and undertake the extra work at the point the change is made but the change has not been processed through payroll at the time
• Any arrears due to a late notification of a change should be included in the calculation of a member's tier, using either the ‘When Paid’ or ‘When Earned’ calculation method as appropriate.

Backdated pay award

• There’s no change to the member’s employment circumstances, no extra responsibilities or hours, just an uplift in pay such as an annual award
• For each month the pay award affects, we require an update line (U) in the MCR submission
• The BK indicator needs to be used in the calculation method for the contribution tier on the U lines for the awards
• The Tier and banding are determined by the current month’s actual pensionable pay (excluding any BK awards for the previous months OR overtime
• When paying arrears of pensionable pay in a pay period due to a backdated pay award, the arrears must be ignored when working out the contribution percentage (i.e. tier) using the ‘When Paid’ method and BK indicator in the contribution calculation method field
• Contributions are calculated on the ‘normal’ earnings for the month and that tier is applied to their total pensionable pay for all lines within the backdated pay ward.

You can find out what to do in this instance with our quick guide (PDF, 101 KB) (This link opens in a new window).

If you need further support, you can find information in our MCR Data Set and Contributions webinar. (PPTX, 5.7 MB) (This link opens in a new window)