Under the Pensions Act 2008, every employer in the UK must put their eligible staff into a workplace pension and pay into it.
You have legal duties from the moment they employ their first member of staff.
However long your company or organisation has been running for, when you take on your first worker, you have automatic enrolment duties that you must comply with straight away.
The duties apply from the new staff’s first day of employment – this is known as your client’s duties start date.
If you employ at least one person, that means they’re classed as an employer, and by law you have responsibilities that they need to act on.
Even if you think you will not need to put their staff into a pension scheme, you still have duties that they need to complete. You will need to continue to assess your staff to see if they meet the eligibility criteria for automatic enrolment, write to tell them how they’re affected, and complete a declaration of compliance.
When someone is about to employ a worker for the first time, they need to take certain steps in preparation for taking on staff, such as determining whether they need to register as an employer with HMRC or taking out liability insurance. Getting ready for automatic enrolment is just one of these steps.
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We can perform the steps below on behalf of you or offer you help and advice – but you remain responsible for the duties being completed. You could be fined if your duties aren’t complied with correctly, or on time.
Actions you must take
You must assess your staff against the eligibility criteria on their duties start date and work out if any of them need to be put into a pension.
It must be suitable for automatic enrolment – we can help you find it. If your staff are eligible for automatic enrolment, both you and the staff will pay into the pension. You should do this as soon as possible, as it may take some time.
You must put any staff who meet the age and earnings criteria into a pension scheme that qualifies for automatic enrolment and pay contributions into it. Staff must be enrolled even if they’ve expressed a wish to opt-out – if they still wish to opt out, they can opt-out after they’ve been put into a pension.
You must write to each member of staff explaining how automatic enrolment applies to them, including anyone not being put into a pension. They must do this no later than six weeks after their duties start date.
You need to go to a declaration of compliance online form and declare how you have met your legal duties, even if they didn’t need to put any staff into a pension. All employers must do this – not having staff to enrol is not an acceptable reason for failing to submit a declaration. The declaration must be completed no later than five months after their duties start date.
Every three years, you must put any eligible staff that left or opted-out of their pension scheme back into it, on the anniversary of their duties start date. You must complete a new declaration of compliance to tell us how they’ve complied with their duties this time.
Watch our guide for business advisers
When a company becomes an employer for the first time, it has automatic enrolment duties from the day the first member of staff started working for them. Watch our video to find out what a business adviser needs to know if an employer asks for help with their automatic enrolment duties.
Staff eligibility for automatic enrolment
Not all staff will need to be automatically enrolled into a workplace pension, but your client must still assess them and determine their eligibility.
If your staff meet the eligibility criteria, they must be put into a pension:
If staff don’t meet the eligibility criteria, they don’t need to be automatically enrolled in a pension unless they ask to be put into one – but you only have to pay into it if the staff earn more than £120 per week/£520 per month/£6,240 per year.
If you deduct income tax and National Insurance (NI) contributions from the earnings of their staff, then they’re usually their employer.
If they used an agency to hire the staff, and the agency pays their NI contributions, then the agency is the employer and your clients don’t need to do anything. You should make sure to tell us that they’re not an employer.
Company directors are eligible for automatic enrolment in certain circumstances.
If a director has an employment contract, and at least one other member of staff – who can be another director – also has an employment contract, they all need to be assessed for automatic enrolment.
If you only have directors on the books and doesn’t employ any other staff, whether the directors have automatic enrolment duties will depend on their roles and if they have employment contracts.
In some cases, directors may be exempt from automatic enrolment duties, even if they have an employment contract, as they’re not classed as a member of staff.
Directors will have automatic enrolment duties if they have a contract of employment and at least one other person also has a contract of employment with the organisation.
If there’s more than one director and no other staff – and at least two of the directors have employment contracts – all directors with employment contracts count as members of staff and are subject to automatic enrolment duties.
If you employe seasonal or temp staff, or they have staff whose hours and pay vary each time they pay them, they’ll still need to assess them to work out if they need to be put into a pension scheme.
You can delay assessing your staff for up to three months – known as postponement – if you know your staff will only be with them for a short time.
Postponement doesn’t change your duties start date, it only delays when they have to assess your staff. It can only be used once, and any staff that are assessed as being eligible for automatic enrolment after this time must be put into a pension scheme.
Some of your staff may not want to be in a pension scheme. This is fine – staying in a pension scheme isn’t compulsory, and they can leave it any time after they’ve been put into one.
However, it is compulsory for eligible staff to be put into a pension to begin with. You must first automatically enrol staff into a scheme before they can opt out of it.
Staff cannot tell you that they don’t want to be in a pension and ask not to be automatically enrolled in the first place. Failure to enrol eligible staff is against your legal duties – these staff must be put into a scheme, even if they don’t intend to stay in it.
Your staff can opt-out of an automatic enrolment scheme, and receive a full refund of their contributions, but only for a limited time. Opt-outs are possible for one calendar month, starting on the date active membership of the scheme began, or when the staff received the letter from your client with their enrolment information – whichever happens last.
Staff can still leave the scheme at any time, but after the one month opt-out period has finished, this is called ceasing active membership. In these cases, whether staff contributions are refunded will depend on the scheme rules.
You must never encourage or induce staff to opt out of or leave their scheme – this decision must be taken freely by the staff. You are not allowed to hand out forms for them to do this.
If your staff want to opt out, the staff must request an opt-out notice from the scheme, which they should give to you.
If you missed your duties start date, you still need to work out what your automatic enrolment duties are and may have to backdate pension contributions.
You must immediately comply with your legal duties, if you haven’t already done so, and can use our simple steps for new employers to find out what they need to do.