As we find ourselves in the middle of the summer months, we thought it a good time to issue a reminder that, where you employ temporary or seasonal workers, you must ensure that you are meeting your Automatic Enrolment (AE) obligations.
Under the rules, you must formally assess each member of staff, including any seasonal or temporary workers, every pay period, including individuals who work only for a few days, a few weeks or several months, or whose hours and pay fluctuates.
Failure to comply with Automatic Enrolment carries serious consequences, including penalties and enforcement action.
Who needs to be Automatically Enrolled?
Only workers who are assessed as ‘eligible’ need to be enrolled into a scheme automatically.
Eligible workers are employees who
- are aged 22 to state pension age; and,
- earn over £192 a week, or £833 a month.
Those who meet the criteria must be enrolled into a compliant pension scheme, which the employer must pay into.
When you are assessing workers for the purposes of Automatic Enrolment, the following should be included:
- basic hours/salary
- commission
- bonus
- overtime pay
- statutory sick pay
- statutory maternity pay
- ordinary or additional statutory paternity pay; and,
- statutory adoption pay.
The assessment of whether a component of pay constitutes an element of qualifying earnings is a decision the employer will need to make.
Enrolling staff with flexible incomes or irregular hours
Following your duties start date, staff who work irregular hours or who earn flexible incomes should be enrolled the first time they earn in excess of the AE thresholds.
Once enrolled, the employer must pay into the pension scheme. There is a legal total minimum contribution made up of worker contributions and a minimum employer contribution (currently for a scheme on qualifying earnings this is set at 8% with a minimum employer contribution of 3%) Please note there are different rates for different earnings basis’ so please check your scheme rules.
Depending on the rules governing your chosen scheme, which must be AE compliant, earnings that fall below £120 per week, or £520 per month may not be subject to pension deductions (Capped Earnings). Where this is the case, the employer may not need to make contributions, but the worker will remain enrolled in the scheme.
Assessing seasonal or temporary staff: Using postponement
It is possible to use ‘postponement’ for certain employees, including temporary staff; specifically, those who are unlikely to be working for you for a period longer than three months.
Postponement effectively delays the need to enrol the employee onto and make contributions to a pension scheme unless the employee expressly requests to be opted into a scheme.
Employees can be postponed for a maximum of three months. At the end of the postponement period, if the worker is still employed by you and is eligible, they must be enrolled into an appropriate pension scheme. You cannot enter into a further period of postponement.
Where you are using postponement, the affected worker/s must be notified in writing within six weeks of the start of the postponement period.
How can GH Payscheme help?
Our BACS-approved payroll bureau can support you to ensure that you are fulfilling your automatic enrolment obligations, and to administer your chosen workplace pension scheme.
If you are unsure about what you need to do to fulfil your Auto-Enrolment duties, we can discuss your circumstances with you and help you to determine the appropriate next steps.
For more information about our payroll and Auto-Enrolment services, for employers in Bedfordshire, Cambridgeshire, Hertfordshire and throughout the UK, contact us today.
