Does Auto Enrolment apply to low-paid staff?

Under the Workplace Pensions rules, all employers have “duties” towards all of their staff who are:

• working or ordinarily working in the UK; and
• aged between 16 and 74; and who
• work under a contract of employment (i.e. an “employee”); or
• have a contract to perform work or services personally and are not undertaking the work as part of their own business

“Eligible workers” are aged between 22 and state pension age and earn over £192 a week (2018/19). If you have staff that meet the definition of an eligible worker, they must be put into a workplace pension scheme and you must pay regular pension contributions for them. You don’t need to ask their permission and therefore we refer to them being “automatically enrolled” into the pension scheme.

If you have no staff to automatically enrol, there is no need to set up a pension scheme immediately. However, while your staff may not be eligible for automatic enrolment, they can still ask to go into a pension scheme. If they do this, your responsibilities will depend on how much they earn:

1. If they more than £116 a week (2018/19) they are a so-called “non-eligible jobholder”. You must put them into a pension scheme and make contributions to the scheme as well.
2. If they earn less than this, they are an “entitled worker”. You must put them into a scheme but you may choose whether you wish to contribute or not.

Failure to comply with the Workplace Pensions rules can lead to a fixed penalty of £400 plus escalating penalties starting from £50 per day. Your local TaxAssist Accountant can help you ensure your business is compliant. Contact us for more information. 

Date published 3 Apr 2018

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.