Any employers who think they can get away without complying with the Automatic Enrolment rules should think again, after further evidence emerged that the regulator will clamp down heavily on uncompliant employers.
The Pensions Regulator will now publish quarterly updates showing how many times it has used its powers to make sure employers meet their obligations.
In the first of these updates, it was revealed that he regulator has used its powers 23 times during the second quarter of 2014, to force firms to comply.
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The regulator has powers to carry out inspections as well as issuing fines, which could be up to £2,500 per day for firms with 50 – 249 employees. Even firms with fewer employees, between five and 49, could be fined £500 per day if they fail to comply.
On top of fines, employers who miss their Staging Dates will be forced to back date contributions to ensure employees are not disadvantaged. Furthermore, if an employer has missed their Staging Date by over three months, they could be forced to pay back dated contributions for their employees, as well as making their own payments.
Commenting on the report Executive Director of Automatic Enrolment at the Pensions Regulator, Charles Counsell, said: “Employers and the pensions industry are understandably interested to know how and when we use our powers. To date the vast majority of employers are complying with their new workplace pension duties without the regulator needing to use our enforcement powers.” (Source: The Pensions Regulator)
However, the regulator also said that they expect the number of firms not complying with the rules to rise over the coming months, as the number of firms which need to comply rises sharply.
How can your business avoid the regulator’s wrath?
The answer to complying with the rules is planning, the longer you give yourself, the more likely you are to meet your Staging Date.
We’ve found employers who have left it to the last minute consistently underestimate the amount of work involved.
Ideally, you should have completed these tasks within six months of your Staging Date:
1. Confirmed your Staging Date
2. Confirmed which of your staff are ‘Workers’ as defined by the Automatic Enrolment legislation
3. Confirmed which of your Workers fall into each of the three categories:
Eligible jobholder
Non-eligible jobholder
Entitled worker
and therefore which of your Workers will need to be automatically enrolled into a pension scheme
4. Reviewed your payroll system to ensure it supports Automatic Enrolment
5. Reviewed your employee data to ensure you have all the information you need about your Workers
6. Started to communicate with your Workers to make them aware of Automatic Enrolment and how it will affect them
7. If you have one, reviewed your existing pension scheme to ensure it is compatible with Automatic Enrolment legislation. Will the pension provider allow new members? Not all will, which means you might need an additional scheme
8. Decided on which pension provider you will enrol your workers into
Learn more about the ‘8 jobs you should have ticked off within six months of your Staging Date’ by clicking here.
News for Limited Liability Partnerships
The update also contained confirmation that members of Limited Liability Partnerships, or LLPs for short, are likely to be considered ‘workers’ for the purposes of Automatic Enrolment.
LLPs are becoming a popular way to trade, combining the advantages of a Limited Company with those of a Partnership; they are increasingly common in the legal and accountancy professions.
Following a court case earlier this year, the Pensions Regulator has now said: “On 22 May 2014 the Supreme Court ruled in Clyde & Co LLP v Bates van Winklehof that a partner of a Limited Liability Partnership was a ‘worker’ under the Employment Rights Act 1996 (the ERA). Prior to this ruling, previous case law under the ERA said that a partner of an LLP was not considered a worker.”
The regulator continues: “Whilst this case and subsequent ruling concerns the definition of a worker under the ERA, the definition is very similar to that of a worker in the Pensions Act 2008 for the purposes of automatic enrolment. Our view is that an LLP should assume that the Supreme Court’s decision is equally applicable and as such, members of an LLP could be considered workers for automatic enrolment.” (Source: The Pensions Regulator)
Members of LLPs need to be aware that the ruling will apply retrospectively. Any LLP with a Staging Date before 1st May 2014 will need to assess whether or not their partners meet the ‘worker’ definition and where necessary take steps to enrol them into a scheme.
How can Investment Sense help?
We know many employers are concerned about their Automatic Enrolment obligations and we’re here to help.
We’ve developed a four stage process to ensure your business is compliant by your staging date and sticks to the rules in the months and years to come.
If you:
- Would like to know your staging date
- Have a question about Automatic Enrolment
- Would like to know how you can comply with the new rules
Then get in touch today, to put it bluntly, this problem isn’t going away and your staging date is only getting closer.
We’re here to help, call us on 0115 933 8433 or email info@investmentsense.co.uk
