Auto enrolment employer mistakes… and how to avoid them

30 September 2015
With an estimated 1.8 million employers still to stage, the chances of more employers failing to comply will increase.

In their latest compliance and enforcement bulletin, the Pensions Regulator has published details of how some employers are failing to comply. Read our brief summary below.

Zero-hour contracts

TPR cites a particular employer who provided residential care workers on a temporary basis. The employer thought that the workers wouldn't be treated as workers for auto enrolment because they were on zero-hour contracts.

The employer was issued with a compliance notice and a fixed penalty notice of £400.

Lesson to be learned

As a starting point, employers should consider all their workers, regardless of contract type. Only then should they decide whether they are treated as workers for auto enrolment or not.

Only a few types of people are excluded from the employer duties, such as the self-employed, some directors, members of the armed forces and those who are not resident or ordinarily resident in the UK.

Everyone else who has a contract to work in the UK will almost certainly be treated as a worker for auto enrolment.

Short-term contracts

TPR gives an example of an employer who employed people during a peak summer period and didn't know that they should have been treated as workers for auto enrolment.

TPR issued a compliance notice to the employer and from then on, the employer used postponement to deal with short term workers.

Lessons to be learned

Postponement is an extremely useful tool that employers can use to reduce auto enrolment administration and cost.

They will need help in understanding how it works and how it can be tailored to suit their business needs.

The auto enrolment earnings threshold

One employer thought that people who earned less than £10,000 a year didn't have to be automatically enrolled even though they were weekly paid.

TPR pointed out that as their workers were weekly paid, they would have to be automatically enrolled if their earnings were more than £192.

Lesson to be learned

Employers will need help in understanding that payroll will pay a crucial part in the auto enrolment process and any software will need to be able to identify all the different pay reference periods an employer might have.

What's next?

TPR will continue to try and help employers as much as possible. But looking at the fairly basic mistakes that have been made by employers so far, it's clear that there will be a lot of employers who will need help if they are to avoid action by TPR.

To find out how we can help you with auto enrolment, get in touch with your usual Royal London contact.

Source:
Automatic enrolment - Compliance and enforcement quarterly bulletin 1 April – March 2015, The Pensions Regulator, July 2015.

About the author

Jamie Clark

Business Development Manager

A self-confessed 'Pensions Geek', Jamie reads Pensions Acts for breakfast. He's spent the last three years working on automatic enrolment and has talked to hundreds of advisers and employers about how they can best prepare.

Last updated: 20 Nov 2015

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