Nest · CAS-104011-B0F5

Ombudsman’s Determination Applicant Miss S

Scheme NEST (the Scheme)

Respondent Dapa Coffee Formby Ltd (Dapa Coffee)

Outcome

Complaint summary

Background information, including submissions from the parties In September 2021, Miss S began employment with Dapa Coffee. Her contract of employment stated that she would be auto enrolled into the Scheme.

From November 2021, pension contributions were deducted from Miss S’ wages but not paid into the Scheme.

Around December 2022, Miss S became aware of the unpaid pension contributions.

On 21 February 2023, Miss S left employment with Dapa Coffee. At this point, pension contributions were still owed to the Scheme.

On 19 March 2023, Miss S wrote to Dapa Coffee to chase her unpaid contributions. She said that she was prompted to do this after speaking with the Scheme administrator, who said it could still not locate her account. In its response, Dapa Coffee advised her that the issue was being rectified.

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On 31 August 2023, TPO repeated the request for information. On the same day, Dapa Coffee replied and accepted the complaint. It advised that it had passed payroll to its accountant (the Accountant) who would rectify the error immediately. TPO requested an update within two weeks.

On 29 September 2023, TPO chased Dapa Coffee for an update and provided a deadline of 5 October 2023.

On 18 October 2023, TPO wrote to Dapa Coffee and said that, in the light of its failure to respond, the case was proceeding formally.

On 20 October 2023, the Accountant wrote to TPO and apologised for the lack of response. He advised that he had started the process of recording the unpaid contributions with the Scheme. The Accountant provided a record of Miss S’ unpaid contributions from January 2022 to February 2023. TPO replied and said that unpaid contributions were claimed from November 2021, the Accountant requested the payslips for November 2021 and December 2021.

Miss S provided TPO with her payslip for November 2021, but did not have a payslip for December 2021. The November 2021 payslip was shared with the Accountant who advised that he had processed payments for January 2022 and February 2022. The Accountant told TPO that the Scheme administrator could take up to five working days to process and collect the payment and that Dapa Coffee would make two weekly payments until the contributions were paid.

On 28 October 2023, Miss S said that no payments showed in her account. She said that she was concerned that payments were to be paid on a weekly basis and was worried the Dapa Coffee would not stick to the repayment schedule. So, she requested a formal investigation.

Caseworker’s Opinion

• The Caseworker stated that TPO’s normal approach, in cases such as these, was to seek agreement from all parties on the facts of the complaint, including the dates and amounts of contributions involved. In this case, Dapa Coffee had responded to TPO’s communications and had agreed that some of Miss S’ pension contributions were still outstanding. So, there was no dispute that maladministration had occurred, and that Miss S was disadvantaged as a result.

• Dapa Coffee had offered to make weekly payments until contributions were up to date. Miss S told TPO that she had no confidence in Dapa Coffee and was 2 CAS-104011-B0F5 concerned that it would default on the payments. She said that contributions had been outstanding for two years and she wanted payment in full.

• In the Caseworker’s view, Miss S had suffered significant distress and inconvenience as a result of Dapa Coffee’s maladministration. The Caseworker was of the opinion that an award of £500 for non-financial injustice was appropriate in the circumstances.

Miss S agreed with the Caseworker’s Opinion on 8 November 2023.

On 22 November 2023, she told TPO that she had not received anything from Dapa Coffee.

On 23 November 2023, Dapa Coffee agreed with the Caseworker’s Opinion.

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• Dapa Coffee was a small, independent business. It said it had electricity and gas bills to pay, and the £500 compensation was a draconian decision.

• Not paying the contributions was a mistake, which Dapa Coffee had now rectified, yet it was still being penalised by TPO.

• Dapa Coffee alleged that making the payment would make it go out of business.

• Dapa Coffee said it was devastated about the mistake, and it had apologised for the error.

• Dapa Coffee said that as soon as it was told about the error, it spoke to the Accountant who rectified the situation.

On 11 March 2024, Dapa Coffee wrote to TPO and confirmed that TPO’s understanding of Dapa Coffee’s objections were correct. Dapa Coffee conceded that the Opinion had been accepted but the attachment with the Opinion had not uploaded on Dapa Coffee’s phone. It said that it hadn’t understood that the Opinion suggested an award in recognition of distress and inconvenience.

4 CAS-104011-B0F5 Ombudsman’s decision Miss S complained that Dapa Coffee had not paid all the contributions due to her Scheme account.

By the time this case was passed to me to consider, Dapa Coffee had taken remedial action to pay the missing contributions. Miss S told TPO that there were minor discrepancies in the figures, but that she accepted that payments had been made, which brought her Scheme account up to date. However, she said that the non- financial loss payment was still outstanding.

There was no dispute that that employee contributions were deducted but held back by Dapa Coffee and not paid into the Scheme. Dapa Coffee accepted that it had failed to pay Miss S’ contributions and agreed with the Opinion issued on 8 November 2024. Subsequently, Dapa Coffee said that it had not realised the terms of the opinion included an award for distress and inconvenience and it saw no reason why such a payment was required. However, ignorance of the terms of the Opinion is no defence or a reason why Dapa Coffee should not make the award for distress and inconvenience to Miss S.

I have considered Dapa Coffee’s objections to the award for distress and inconvenience, but it is clear that there was a significant delay in remitting contributions to the Scheme. I acknowledge that the contributions have now been paid. However, Dapa Coffee’s failure to pay the employee and employer contributions into the Scheme amounted to unjust enrichment which had caused Miss S to suffer financial loss.

It is clear that Miss S would have suffered significant distress and inconvenience at the thought of her pension contributions being lost and whilst waiting a considerable time for the matter to be resolved, and so is entitled to an award for the non-financial injustice.

Directions

Anthony Arter CBE

Deputy Pensions Ombudsman

12 April 2024

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