Your auto-enrolment obligations relate to your employees and this means:
“Any individual who works under a contract of employment (an employee), or has a contract to perform work or services personally and is not undertaking the work as part of their own business.”
This is a very broad description and you’ll need to make sure you don’t miss anyone.
Many of your employees may need to be automatically enrolled, depending on:
- their age
- their earnings
- whether they normally work in the UK
And other employees can ask to join too.
If your staff have a one-off increase in wages, because they work irregular hours or earn flexible incomes, they should be enrolled the first time* they earn over the auto-enrolment threshold of £192 a week or £833 a month if paid monthly.
Once staff have been enrolled, you must pay regular contributions into their pension scheme (unless they’ve decided to opt out). If the staff member’s earnings fall below £120 a week or £520 a month, you may stop paying contributions unless the rules of the pension scheme they’ve enrolled into requires them to continue.
* Note that under the postponement rules, you can delay enrolling staff into the pension scheme when they first meet the criteria to be an eligible jobholder for up to 3 months.
If you have freelance workers on the business’s payroll with contracts, paying tax and National Insurance contributions, they’ll need to be auto-enrolled. If this isn’t the case, they don’t need to be auto-enrolled.
Not all employees have to be put into a pension scheme automatically, but they can still ask to join. Whether they’re enrolled automatically or not depends on how much they earn, their age and if they normally work in the UK.
If your employees don’t want to be enrolled, they still must be enrolled if they’re assessed as eligible. They do have the option to leave the scheme at any time. If they opt out within 30 days, they’ll be entitled to a refund.
Among the employees you must put into a workplace pension, there are some exceptions. You can choose whether or not to enrol them if:
- they’ve handed in their notice (unless they take it back later)
- they benefit from some kinds of tax protection that applies to the pension scheme
- in the last 12 months they’ve received what’s known as a ‘winding-up lump sum’ from a different pension scheme you’ve offered.
You may need to check with your employees whether any of this applies to them.
If your employee is leaving employment, you may apply postponement to the employee meaning they don’t need to be auto-enrolled up to 3 months taking them after their leave date. You’re allowed under legislation to enrol them if you wish to do so, however, for an employee who’s leaving you’ll need to decide whether it’s worth doing so.