Employers boosting their workforce — even temporarily – need to remember the pensions automatic enrolment rules.
Under the rules, every employer in the UK has an obligation to put specific staff into a workplace pension scheme and contribute towards it. There is no minimum threshold to being an employer: if you employ at least one person, you’re classed as an employer for these purposes.
The first step is to check whether you need to provide a pension scheme and make contributions into it. And the answer is yes, if anyone working for you is between the age of 22 and State Pension age, and earns more than £192 a week, or £833 a month. The rules apply equally to short-term, seasonal, temporary or other staff who are not on regular hours or incomes. Any new staff taken on — including seasonal workers — should then be assessed every time they are paid, to see if they need to be put into the scheme. Where staff work irregular hours or receive irregular payments, they will also need to be enrolled the first time they earn over these thresholds.
Employer option
But there is a potential workaround where you know staff will be working for you for less than three months. Called ‘postponement’, it essentially puts the need to assess staff on hold for three months. Postponement can be used for as many or as few staff as you prefer, and the postponement period doesn’t have to be the same length for everyone. During this period, you won’t be required to put staff into a pension scheme, or make contributions into it. There is no need to notify The Pensions Regulator if you want to use the process.
There is still considerable small print to get right, however. Staff need to be kept informed: if you intend to use postponement, you must write to staff to say so. There are also time limits to be aware of. You have six weeks from the date postponement starts to write to your staff.
Staff also have rights, and may ask to join or opt into the employer scheme, even during the postponement period. Staff choices over opting in, opting out and joining form a complex area of their own, and we should be pleased to advise further.
Finally, bear in mind that it’s only a short-term fix. It’s compliance as usual on the last day of the postponement. At this stage, you will have to assess staff to see if they are eligible; put those eligible into your pension scheme; and start to make contributions.
Compliance
Employers will be aware that The Pensions Regulator monitors compliance very carefully, and where an employer doesn’t carry out their workplace pensions duties, it may issue a warning notice and deadline for compliance. Where there is continued failure to comply, employers can be fined.
If you would like to speak with one of our specialist advisers and discuss this further, please email solutions@ellacotts.co.uk or call us on 01295 250401.
* Information for readers: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore, no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.
