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Which employees do and don’t I need to enrol?

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.

Exceptions
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.

Which employees can ask to join?

Whether they’re enrolled automatically or not depends on how much they earn, their age and whether they normally work in the UK.

If they’re enrolled automatically, they’re known as ‘Eligible jobholders’.

Then there are 2 categories for the employees who can ask to join:

Non-eligible jobholders – you’ll have to pay into their pension pots if they ask to join.
Entitled workers  – you won’t have to pay into their pension pots if they ask to join.

If your employee isn’t eligible but has asked to join, please add them to payroll with an auto-enrolment status of ‘non-eligible’ when you send us your employee data. If you need help you can contact us.

What are the auto-enrolment duties for enrolling directors?

According to The Pensions Regulator, an employer has the option to enrol a director into a workplace pension if they’re eligible for auto-enrolment. But they don’t have to.

The regulator’s definition of a director

A director refers to anyone who holds office as a director. Under the Companies Act 2006, a person is viewed as a director if:

  • they’ve been formally appointed
  • they’re in a decision-making role which relates to the governance of a company as a director (who may not necessarily be formally appointed)
  • If a person just has ‘director’ in their job title, this wouldn’t count.

A director would be viewed as eligible for auto-enrolment if:

  • they have an employment contract with the company (this can be a written, verbal or implied contract)
  • there’s at least one other person who has an employment contract with the company

If an employer chooses to not enrol a director, they’ll still need to communicate to them and complete their declaration of compliance.

A director still has the right to opt in or join a workplace pension. If they make this request, the employer must enrol them (unless they’re in their notice period). If a director is enrolled, the employer’s auto-enrolment duties apply.

For more information about enrolling directors into a workplace pension, visit The Pensions Regulator’s website.