Auto enrolment and contract of employment

Auto enrolment and contract of employment

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We know that companies with only one director (and no other officers/employees) are outside auto enrolment (see s90 Pensions Act 2008).

However, for clients with more than one officer, which will be quite common where a separate person is company secretary, then the above exemption won't apply and we need to consider if the officers have an employment contract (and so fall to be 'workers').

Where there is no written contract, which will be very common, we still need to consider if there is an implied one.

Where the director is being paid via payroll, then we would have to argue the payments are 'directors fees' (i.e. for services provided to company to fulfil role of director) and not reumneration for other work done (otherwise there must be an implied contract for that work). The same applies for company secretaries.

Where payroll is the typical £10k/£10.6k, then the above would seem feasible. For higher payrolls there could be an issue.

I don't expect the Pension Regulator to take the above point in practice, but I suppose it is possible they could?

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By stt
16th Apr 2015 13:22

Regarding the above, I have now received a reply to an email sent to the Pensions Regulator, and this states:

"Please note the terms of employment can be implied, rather than explicitly stated. The distinction of whether a contract is much debated in employment law and the Regulator cannot express a view as to whether a contract if given or implied. It will therefore fall on the employer to establish this using all the evidence available to them and if unsure, you may wish to seek appropriate expert advice."

So it seems we can take the position that a £10k/£10.6k salary is for director's fees, and so no contract of employment can be implied. Higher salaries could run into issues, but it seems unlikely the Pensions Regualtor will take the point.

 

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