Does automatic enrolment apply to you?

29 Jul 2015 Una McKernan    Last updated: 20 Oct 2015

All employers will need to work out if automatic enrolment (AE) applies to them. If you have at least one member of staff who is paid via a PAYE scheme, AE duties apply.

Your staging date is set in law as of 1 April 2012 and is the date your automatic enrolment duties come into effect for you.  You must be prepared for this date. 

You need your PAYE reference to find out your staging date.  If you don't know your PAYE reference, it can be found on a P6/P9 coding notice or on your white payslip booklet P30BC.

You can check your staging date(s) by entering your PAYE references into the employer’s staging date tool:

http://www.thepensionsregulator.gov.uk/employers/staging-date.aspx            

The Pensions Regulator (TPR) will write to all employers to confirm their staging date. 

If an employer does not pay their staff through a PAYE scheme, their staging date will be 1 April 2017.

What if I am a new employer?

New employers paying PAYE income for the first time (or using HMRC’s PAYE for the first time) from 1 April 2012 to 30 September 2017 will have a staging date between 1 May 2017 and 1 February 2018.

Are there any exceptions to automatic enrolment?

If you don’t have any staff other than directors, you may not have any automatic enrolment duties.  You won’t have any duties if the only people working for you are:

  • you as the sole director, or
  • a number of directors, none of whom has an employment contract, or
  • a number of directors, only one of whom has an employment contract

Automatic enrolment will apply if more than one director has a contract of employment.

Further information

More information about employment contracts is available from:

https://www.gov.uk/employment-status/employee    

It is noteworthy that a contract of employment does not have to be in writing.  Our view would be that if someone is on your payroll and receiving payment, then a contract would be deemed to exist.  Please note that we are not legal experts and legal advice should be sought if you require clarification of your position as an employer.

In addition to the above, you may not be an employer if you do not, or no longer have, any staff because any of the following statements apply to you:

  • the company has ceased trading;
  • the company is terminally insolvent e.g. has gone into liquidation; or
  • the company has been dissolved.

Furthermore, if you employ one or a number of employees who all, at the staging date, would be deemed as non-eligible or entitled workers there is no immediate requirement for you to have in place an auto enrolment scheme.  However, a scheme would be required should an employee become eligible in the future.

If you receive a letter which includes a staging date and you believe that you are not an employer for one of the reasons above, please email [email protected] and complete the details in the pre-populated message that opens when you select the email address.

If you believe you don’t have any automatic enrolment duties you will need to inform TPR in writing.  A template is available as per the email address above, at:

http://www.thepensionsregulator.gov.uk/employers/What-if-I-dont-have-any-staff.aspx      

If circumstances change so that automatic enrolment duties subsequently do apply to you, you’ll need to inform TPR as soon as possible.  This would happen, for example, if you took on a member of staff other than a director, or if at least two directors started working for you under contracts of employment or an employee previously non-eligible becomes eligible.

Please note that, if TPR discovers that an employer has provided false or misleading information in order to evade its automatic enrolment duties, this will be taken into account when deciding whether to take action against that employer in future.

Frequently Asked Questions

Does automatic enrolment apply to me if I employ a carer?

If the person who provides you with care or personal assistance is provided by an agency or the council, you are not an employer and automatic enrolment duties will not apply to you.

If you directly employ one or more people to provide you with care or personal assistance, you’re an employer and automatic enrolment duties will apply to you (but see comments below).  This will be the case whether you use the money provided by your local council in the form of direct payments or a personal budget to pay the carer, or you use your own money.

Automatic enrolment is similar to your employer responsibility to deal with National Insurance and tax.  So, in the same way that you have to pay employer National Insurance in respect of your carer’s earnings and deduct PAYE tax from their pay, depending on the circumstances, you must also put your carer into a pension scheme and pay money into it on their behalf.

In which circumstances will I need to automatically enrol my carer into a pension scheme?

If the carer you employ is aged between 22 and the State Pension Age and you pay them more than £192 a week, you’ll have to put them into a pension scheme and pay money (also called ‘contributions’) to that pension scheme.

If the carer you employ is aged under 22 or over the State Pension Age, or you pay them less than £192 a week, you don’t have to put them into a pension scheme.

How will I pay for pension contributions to my carer?

If you receive money from your council to pay your carer, the council should build the cost of employing them into the money they pay you.  This will include National Insurance contributions and any other costs that may arise.

The pension contributions you are required to make under automatic enrolment are a cost of employing someone in the same way as having to pay employer National Insurance on their earnings.  It’s for the council to decide the level of the payments they make to you, not TPR. If you have questions about the money you receive, you should contact your local council. 

Conclusion & Our House View

Am I an employer/do my staff work under a contract of employment or personal services?

The automatic enrolment legislation will affect all employers with at least one worker. The Pensions Regulator deems an employer to be an individual/company who has at least one employee contracted to work for them under a contract of employment or personal services.

Whilst not legal practitioners, we take the view that if you are unsure if you are an employer and/or if you must comply with auto enrolment legislation you have three main options: 

  • Seek legal advice as to whether a contract of employment is deemed to exist and whether you have auto enrolment duties to comply with;
  • From your own assessment of your position, decide:
    • that you do not have to comply with the regulations and make a return stating such to The Pensions Regulator; or
  • From your own assessment of your position, decide:
    • that you do have a duty to comply and fulfil your obligations.

Where in doubt, please consult a relevantly qualified individual authorised to provide advice on employment law.

Do I need to set up a Qualifying Workplace Pension Scheme?

If an employer does not have any members of staff that are eligible to be automatically enrolled there is no mandatory requirement to have a pension scheme in place on the staging date. This does not, however, mean that an employer does not have duties under automatic enrolment. Likewise it does not mean that an employer should not establish a Qualifying Workplace Pension Scheme at/or before their staging date if deemed appropriate. 

Employers will have duties to all their members of staff even if their workforce only consists of non-eligible jobholders and entitled workers. The employer is required to write to their staff and inform them of which category of worker they fall into and their respective rights. It is important to note that a jobholder can request to opt into a scheme at any point and the employer must act on this where appropriate. 

Furthermore, every employer has a duty to declare their compliance with The Pensions Regulator, even if they have no eligible jobholders in their workforce. A declaration of compliance is the legal requirement to submit information to The Pensions Regulator about how you’ve complied with your automatic enrolment employer duties.

Bearing in mind that an employer will often have to make changes to payroll, design and subsequently set up a pension scheme, we believe it may often be prudent to make these changes and establish a workplace pension scheme at or before the staging date if there is a reasonable expectation that staff may become eligible (requiring auto enrolment) or exercise their right to opt in.  In establishing this, an employer should be careful not to actively encourage staff to opt out (which could be considered an ‘inducement’).  Any decision to opt out must be taken freely by your staff member without influence from you.

Important notes and reference(s):

The comments in this document reflect our current understanding and interpretation of the auto enrolment legislation.  If you are unable to confidently determine whether you are an employer or employ staff under a contract of employment or personal services you should consult with a relevantly qualified legal practitioner.

The information provided in the document is based on our understanding and interpretation of the legislation, rules and regulatory framework as they apply today.  Please note that this information may be subject to change on an annual and or ad-hoc basis.

Reference:

More information is available via the Pensions Regulator’s website: http://www.thepensionsregulator.gov.uk/employers/your-step-by-step-guide-to-automatic-enrolment.aspx               

For further information on Moore Stephens Financial Services (NI) Ltd: http://www.moorestephens.co.uk/msca.aspx

For more information on how Moore Stephens Financial Services (NI) Ltd can help you comply and the solutions they have available:

https://www.incorporatebenefits.co.uk

https://www.youtube.com/watch?v=Mo8Henc1TOk

Every effort is made to ensure that the contents of this document are accurate, but the advice given should not be relied on as a definitive legal statement.
by Una McKernan

Deputy Chief Executive

[email protected]

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