As an employer, your 'duties start date' begins when your first member of staff starts working for you and usually becomes eligible for 'automatic enrolment'.
Information in this guide explains how to set up a workplace pension scheme and meet your ongoing legal duties for maintaining it (e.g. re-enrolment and re-declaration).
As a rule, deducting tax and National Insurance contributions from the wages of an employee makes you an employer (check below).
Employers must enrol and make a contributions for all staff members:
Your staff can also become eligible for 'automatic enrolment' because of certain circumstantial changes (e.g. they get older or their earnings increase).
When this happens, you must add them to your workplace pension scheme. You would also need to inform them in writing no later than six (6) weeks of the day that they became eligible (e.g. met the criteria).
Important: There is no legal requirement for employers to enrol employees in an occupational pension scheme if they can provide a lifetime allowance protection certificate (as proof).
You have become an employer once you employ at least one person. As such, and according to the Pensions Act 2008, you would need to place certain staff members into a workplace pension scheme - and make employer's contributions towards it.
Employers can get further information about workplace pension duties as part of 'automatic enrolment' on The Pensions Regulator website.
Note: Your pension provider would be able confirm whether an existing company pension scheme that you use for automatic enrolment meets the rules.
If you employ any eligible staff, you will need to pay (contribute) a minimum of 3% of their 'qualifying earnings' into their occupational pension scheme. Different pension schemes have varying amounts counting as 'qualifying earnings'.
As a rule, your employee's total earnings (ranging from £6,240 up to £50,270 per year before tax) would count as total earnings. The amounts usually include:
Employers need to deduct employee contributions from their staff member's pay each month. The amounts need to be paid into the staff's pension scheme no later than the 22nd day of the following month (or the 19th if paid by cheque).
The contributions for each employee need paying no later than the date agreed with the provider (e.g. each time you run payroll). Furthermore, you would need to backdate any missed pension payments.
Important: Making late payments (or failing to pay the minimum contribution for each staff member) can result in a financial penalty.
After setting up a workplace pension scheme, you will need to manage it too. Hence, your ongoing legal duties will include:
Employers need to re-enrol staff into the pension scheme every three (3) years following the date when the first member of staff started working, if:
What if a staff member left the pension scheme twelve (12) months or less before the next re-enrolment date?
In this case, you can choose whether to re-enrol them on that particular date or you can wait until the next re-enrolment date (e.g. in three years' time) providing they still meet the eligibility criteria.
Employers must write to all eligible staff no later than six (6) weeks after the re-enrolment date. The letter must inform the worker that you put them back into your workplace pension scheme.
Furthermore, you must complete your re-declaration of compliance by your deadline and every time you carry out your re-enrolment duties (to avoid getting a fine). You need to carry out this task even for staff members who were not re-enrolled.
Note: The Pensions Regulator has a tool for finding key dates for re-enrolment (e.g. putting staff back into your scheme).
In most cases, you will get some requests from staff members to join (or to leave) your pension scheme. If this happens, you must check their eligibility to join and then place them into the scheme no later than one month of receiving the request.
Likewise, you have one (1) month to take staff members out of your company pension scheme - if they make a request to leave it.
Staff can ask to leave a pension scheme within one month of joining (e.g. during the 'opt-out window'). If this happens, you would need to refund their contributions within one month. Asking to leave the scheme after the opt-out window expires means their contributions would remain in their pension pot until they retire.
Employers need to keep proper records of how they are meeting their legal duties for maintaining their pension scheme. Thus, the records must include:
Note: Employers must keep workplace pension scheme records on file for six (6) years. But, requests to leave the scheme only need to be kept for four (4) years.
Millions of people have become part of the automatic enrolment process and now have money saved in a workplace pension.
So, how do you check if you're an employer and whether you need to follow automatic enrolment rules? Generally speaking, the following factors indicate you have employer status:
Note: The main section contains a law guide for people management and the essential things you and your organisation need to consider when hiring workers.
Set Up and Manage a Workplace Pension Scheme: Guide for Employers