Auto-enrolment - husband and wife company

Auto-enrolment - husband and wife company

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Dear All,

Facts

Limited company

Husband and wife directors and shareholders

£7.5k salaries each per year 

Husband is the 'worker', wife just attends meetings.

Question

Given that the salaries are below £10k per annum, I believe that the company/employer will not be required to automatically enrol the directors for AE. What steps must the employer take to make sure the whole process is compliant? Neither will want to opt in, they are only interested in being compliant with regards paperwork etc.

Any comments gratefully received.

Replies (8)

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By LancsAccountant
17th Feb 2015 21:42

Auto-enrolment - husband and wife company

I have spoken to the Pensions Regulator on this subject. ( the helpline)

They stated that, providing there were no other employees and that the directors had no contract of employment, and no contract of service, then an email  to the pensions regulator stating these details, would mean that the business would not need to auto-enrol.

I have to say I thought the answer tripped off the advisors tongue pretty easily.

The detailed information that I have seen only relates to the situation of a sole director, that can exempt themselves.

I am going to look into this further, and re-question the helpline at some point.

I would have thought there would be more to it then a quick email, and at least some kind of reply or acknowldegment.

I am happy to let you know how I go on.

Hope this helps

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paddle steamer
By DJKL
18th Feb 2015 08:57

flagged

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By martin.curtis
18th Feb 2015 14:16

Same

TPR helpline is consistent then.

This was the advice I received from the Pensions Regulator via two emails in Dec 14.

 

Thank you for your recent email dated the 11 December 2014.

 

If an entity has no workers under the terms of automatic enrolment then The Regulator must be informed, as we won’t know this information until notified and will continue to correspondence to entities that may be exempt. 

 

An employer can appoint a third part to notify The Regulator, we will need confirmation of the PAYE scheme, declaration they have no workers and confirmation that authority has been obtained from the employer to act on their behalf.

To notify The Regulator you can email us at [email protected] or post to The Pensions Regulator PO Box 16314, Birmingham, B23 3JP

Regards

Sam Biddle
Customer Support Adviser
Automatic Enrolment

Tel: 0845 6001011

 

 

Thank you for your recent email dated 12 December 2014.

Where there is a director of a company and the company has no other employees, then they are not classed as a worker. The company is therefore not subject to automatic enrolment and will not have duties for the director. If a company is comprised of two directors, and are not under any contracts of employment or service then there will be no automatic enrolment duties for that company.  .

 

However, if the company takes on a second worker, and both the director and the new employee work under a contract of employment, then both the director and the new employee will be workers for the purposes of the employer duties and the company will have responsibilities in relation to both of them.

Regards

Emma Bowe

Customer Support Adviser
Automatic Enrolment

Tel: 0845 6001011 

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By Kazmc
18th Feb 2015 14:24

.

Not sure if this will help anyone but below is a response to a query I posted on their linkedIn page re what Director/Co Sec scenario payrolls would be required to comply with...

 

The Pensions Regulator

The Pensions Regulator at The Pensions Regulator

Company directors, as office holders, are not usually workers for automatic enrolment purposes and thus do not need to be assessed for automatic enrolment. However, care should be taken when assessing directors as it is necessary to check if they also hold a contract of employment with the company. This is because the legislation stipulates that if a director has a contract of employment and any other person in the company is also employed under a contract of employment, then the director will be a worker and will need to be assessed for automatic enrolment.

So, using your examples:

In a company with two directors only and no other staff:
If none of the directors are employed under a contract of employment, then they are not workers for automatic enrolment purposes.
If both directors have a contract of employment, then they are workers.
If one director has a contract of employment but the other director does not have a contract of employment, then none of the directors need are workers for automatic enrolment purposes.

In a company with three or more directors and no other staff:
If none of the directors have a contract of employment, then none of them is a worker.
If Director A has a contract of employment and either director B or C or any other director has a contract of employment, then director A is a worker (as well as the other director/s that have a contract of employment.

In the case of a company with one director and one company secretary:
If the director does not have a contract of employment then he is not a worker
If the director has a contract of employment and the secretary also has a contract of employment, then the director is a worker.
If the director has a contract of employment but the secretary does not have a contract of employment, then the director is not a worker for automatic enrolment purposes. In this example, the company will have automatic enrolment duties towards the secretary if she/he falls within the definition of “worker” for automatic enrolment purposes.

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Replying to justsotax:
Euan's picture
By Euan MacLennan
20th Feb 2015 10:19

Lack of clarity about company secretaries

Kazmc wrote:

Not sure if this will help anyone but below is a response to a query I posted on their linkedIn page re what Director/Co Sec scenario payrolls would be required to comply with...

The Pensions Regulator

The Pensions Regulator at The Pensions Regulator

Company directors, as office holders, are not usually workers for automatic enrolment purposes and thus do not need to be assessed for automatic enrolment.

In the case of a company with one director and one company secretary:

If the director does not have a contract of employment then he is not a worker
If the director has a contract of employment and the secretary also has a contract of employment, then the director is a worker.
If the director has a contract of employment but the secretary does not have a contract of employment, then the director is not a worker for automatic enrolment purposes. In this example, the company will have automatic enrolment duties towards the secretary if she/he falls within the definition of “worker” for automatic enrolment purposes.

What about the common H&W scenario where neither the director nor the company secretary has a contract of employment?  Is the secretary not a worker and hence, not subject to AE, because she is an office holder?

 

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Replying to kiwilondon99:
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By onicholson
20th Feb 2015 12:38

Contract of service

Euan MacLennan wrote:

What about the common H&W scenario where neither the director nor the company secretary has a contract of employment?  Is the secretary not a worker and hence, not subject to AE, because she is an office holder?

To quote TPR (http://www.thepensionsregulator.gov.uk/docs/detailed-guidance-1.pdf) :

Para 9.

A worker is defined as any individual who:
• works under a contract of employment (an employee), or
• has a contract to perform work or services personally and is not undertaking the work as part of their own business.

Note on page 9.

A note about contracts
• A contract does not have to be in writing
• It can be a verbal contract between the employer and the worker
• The terms of employment can be implied, rather than explicitly stated

Para 18.

No single factor, by itself, is capable of being conclusive in determining whether a contract is ‘for services’ or ‘of service’. However, individuals are likely to be considered as personal service workers (workers under the contract of services) if most, or all, of the following statements are true:
• The employer relies on the individual’s expertise and expects them to perform the work themselves
• There is an element of subordination between the employer and individual, for example the individual reports to the employer’s managers or directors in respect of the specific operation or project on which they are contracted to work
• The contractual provisions state that the contract is not a contract for services between the employer and the individual’s own business
• The contract provides for employee benefits such as holiday pay, sick pay, notice, fees, expenses etc
• There is a mutual obligation set down in the contract to provide or do the work
• The individual does not incur any financial risk in carrying out the work
• The employer provides tools, equipment and other requirements to the individual to carry out the work.

 

I'd assume most cases have no written contract but an implied contract is often present. I suspect the details will depend on the company itself. e.g. one partner runs the business day to day and the other only helps with some bookkeeping. In that case, TPR could argue the partner doing the books is subordinate as they are acting as an employee. If they are more equal partners, it's pretty clear that neither should be a worker.

I expect most companies will simply say that neither person is a worker and leave it at that since even TPR admit that the whole service of contract idea is difficult to define precisely.

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Replying to lesley.barnes:
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By LancsAccountant
22nd Feb 2015 13:51

Auto enrolement

I agree woth onicholson's final para.:-

I expect most companies will simply say that neither person is a worker and leave it at that since even TPR admit that the whole service of contract idea is difficult to define precisely.

Most typical man/wife bsuinesses will sign off as having no 'workers' , and TPR will not have either the resources or inclinatrion to prove these businesses wrong.

For these businesses auto - enrolement will not be an issue.

The only problem that may arise is the circumstance of an acrimonious marital split, when 1 party may  accuses the company of not fulfilling it's AE obligations.

No that will be interesting.

 

 

 

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By tebthereb
19th Feb 2015 21:06

flagged

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