There have been multiple threads regarding AE. This is aimed specifically at those like me who are in Practice servicing mainly micro businesses.
Watched a webinar hosted by The Pension Regulator yesterday. They confirmed that a Director is not classed as a worker (including more than one, e.g. husband & wife) if meeting conditions below, and that you simply email them to advise that is the case to be removed from the process.
Taken from the slides issued after the webinar:-
and
-------
Obviously there are still many questions with regard to AE, but this means I can fire off a number of emails and remove about 25% of my client base from having to worry about it.
Hope that helps.
Replies (23)
Please login or register to join the discussion.
Thank you
That is exactly the question that I wanted answered but couldn't find anywhere on the official website!
Thank you.
Quoting from the OP
"–there is at least one other person working for the company under a contract of employment•"
What does it mean?
I can’t understand the meaning of this context within the general concept of the statement.
Any help will be appreciated.
It could be better presented
as:
• A director who is not working under an employment contract is never classed as a worker.
• The exemptions can apply to more than one director working for the same company.
• Even if a director works for the company under a contract of employment, he will not be classed as a worker, unless there is at least one other person working for the company under a contract of employment.
Husband & Wife?
What about H&W equal shareholders where one is a Director and the other isn't.
Is it best to appoint the non-Director as a Director?
Or given that she/he is an "owner" and has no contract of employment, can an email be sent to the Pensions Regulator?
Office holder
What about H&W equal shareholders where one is a Director and the other isn't.
Is it best to appoint the non-Director as a Director?
Or given that she/he is an "owner" and has no contract of employment, can an email be sent to the Pensions Regulator?
If the "non-director" has been appointed as the company secretary, I understand that (s)he would be an office holder, like a director, and thus not treated as a worker. However, if neither a director nor a company secretary, (s)he would be a worker subject to the AE rules. Also, remember (s)he would not have to be auto-enrolled into a pension scheme unless her pay was more than £10,000 a year. If her pay was between the NI LEL and £10,000, she might be a non-eligible jobholder and you would only need a pension scheme if she chooses to opt in.
Mumpin, my understanding in the scenario you suggest is that you WOULD have to set up a scheme and go through the whole rigmerole.
Appointing the non-director as a director should get around this.
I'm about to be in this exact position (and why my staging date is June when there is only me on the payroll is beyond me) as my wife is going on the payroll next month.
Personally I figured going down the route of actually setting everything up and even going as far as making the contributions isn't the worst idea. At least I'll actually have some experience when clients inevitably ask us to do the same for them.
Workers
If a scheme has 2 Directors and one employee earning <£10k then does that mean they are all workers if the employee has a contract of employment?
@Matrix
If a scheme has 2 Directors and one employee earning <£10k then does that mean they are all workers if the employee has a contract of employment?
Only a director with a contract of employment would be a worker subject to AE if there is another employee. Directors without contracts of employments are never treated as workers.
When to email
•If the company has received a letter from us and they have no workers on their staging date,
Is it acceptable to email now for a staging date in 12 months time as the OP implies or do we have to wait until the week before?
The points on the slide are
I htink its useful to know the points on the slide are taken from the Pensions Act 2008:
88 “Employer”, “worker” and related expressions
...
(2) “Contract of employment” means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing.
(3) “Worker” means an individual who has entered into or works under—
(a) a contract of employment, or
(b) any other contract by which the individual undertakes to do work or perform services personally for another party to the contract.
...
(5) For the purposes of subsection (3)(b), it does not matter whether the contract is express or implied or (if it is express) whether it is oral or in writing
90 Directors
(1) A person who holds office as a director of a company is not, by virtue of that office or of any employment by the company, a worker for the purposes of this Part, unless—
(a) the person is employed by the company under a contract of employment, and
(b) there is at least one other person who is employed by the company under a contract of employment.
So:
Only one director => company not subject to any AE obligations (even if director being paid £100k under employment contract)Only two directors => only within AE if both have employment contracts (written/verbal)One director + one company secretary => only within AE if company secretary has employment contract (written/verbal)
I assume the pensions regulator would not try and argue any fees being paid to a director or secretary are under a 'contract of employment', unless it is clear there is one, which will only be the case if it is written or company & director/secretary confirm there is an oral one.
I make the above point as it is lost on me why a director providing (say) IT contract services would not be thought of as having an implied employment contract, as the work is not being performed to fulfil director duties?
A E - not a separate branch of the law
stt has "said":
"I assume the pensions regulator would not try and argue any fees being paid to a director or secretary are under a 'contract of employment', unless it is clear there is one, which will only be the case if it is written or company & director/secretary confirm there is an oral one.
I make the above point as it is lost on me why a director providing (say) IT contract services would not be thought of as having an implied employment contract, as the work is not being performed to fulfil director duties?"
The PR will be working within English/UK/European Law and the meanings therein, consequently I would expect them to argue that if there are 2 "Office Holders" who are being paid for anything that is not 100% related to fulfilling their "office holding" duties as an "Office Holder", that they will each have an implied contract of employment. Such as the IT contractor set out above.
Should the 2nd spouse (the non-IT contractor) have another job then there could be a prima facie argument that they only perform their "office holder" duties, but watch out for HMRC wishing to disallow some of their £10,600 salary as "Office holding" duties are unlikely to demand a £200 per week salary!!