UK HR Term
Qualifying earnings
Qualifying earnings is the band of an employee's pay used to calculate auto-enrolment pension contributions. For 2024–25 it ran from £6,240 to £50,270; both employer and employee minimum percentages apply only to earnings within this band.
In plain English
Qualifying earnings is the band of an employee's pay that pension contributions are calculated on. Pay below the lower limit and pay above the upper limit are both ignored — only the slice in between counts.
The 2024–25 band
- Lower limit: £6,240 a year
- Upper limit: £50,270 a year
So an employee earning £30,000 has qualifying earnings of £30,000 − £6,240 = £23,760. Their 5% minimum contribution applies only to that £23,760, not to the whole £30,000.
Why the band exists
The lower limit excludes very low earners — the contribution would be tiny and the admin cost outweighs the benefit. The upper limit caps the mandatory contribution; higher earners can save more voluntarily, but the law doesn't force the employer to match it.
Earnings included
Qualifying earnings includes:
- Basic salary or wages
- Overtime
- Bonuses and commission
- Statutory sick pay
- Statutory maternity, paternity, adoption pay
It does not include benefits in kind, employer pension contributions, or expense reimbursements.
Reviewed annually
The thresholds are reviewed each tax year. They've changed over time (the lower limit was £5,876 in 2017–18, now £6,240) but have been frozen recently. Always verify current values at gov.uk before processing payroll.