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Enforcement of Non-Compliance for Auto Enrolment - What Happens?

26th Jun 2017
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The number of non-compliance investigations and penalty notices being issued to employers has significantly increased this year. Auto enrolment is the law and all employers must comply, otherwise they will face financial penalties. The Pensions Regulator is expecting the number of penalty notices to escalate as the small and micro employers start to stage. The graph below from The Pensions Regulator (TPR) illustrates that October will see the largest numbers of employers going through their automatic enrolment duties.

tpr-graph

How does TPR investigate non-compliance

The issue of non-compliance is a serious one and the Regulator has a range of powers they use to investigate. TPR can request information from employers on a voluntary basis or they can decide to issue formal notices asking for information. This year, employer spot checks are being conducted at business premises across the UK to ensure automatic enrolment compliance. Courts may be used to conduct investigations where necessary. The Pensions Regulator has declared:

“Our investigations are conducted to the highest standards, ensuring we regulate with fairness, transparency and consistency.”

Non-Compliance Enforcement

If an employer hasn’t met their legal auto enrolment duties, they may receive a warning letter detailing a deadline that they need to meet their duties by. Failing to meet this deadline will result in the employer being issued with a statutory notice. Statutory notices inform the employer that they need to comply with their employer duties and/or pay any contributions that they have missed as a result of missing the staging date. Employers may also face an additional penalty where they would have to pay any interest on the unpaid contributions. It is extremely important that each and every employer follows the instructions within the given time frame to comply fully with automatic enrolment. Failing to meet these duties will result in a penalty notice being issued to offending employers.

Employers can be issued with a fixed penalty notice if they fail to comply with their statutory notice or if there is evidence of breaches of the law. This fine is not based on the number of employees that an employer has. It is a fixed fine of £400 and must be paid within a certain time frame. If an employer persists with non-compliance, the penalties and fines will quickly escalate. Fines will then be based on the number of employees an employer has. Employers will face a daily fine between £50 and £10,000, depending on the number of employees.

Avoid a fine

Complying with your auto enrolment duties should be relatively straightforward. The most time consuming part will be to choose a suitable qualifying pension scheme. If you are an employer who does not have any eligible jobholders, you don’t even need to set up a pension scheme. However, it is advisable that an employer should choose a scheme in the event of an employee exercising their right to opt in or join the scheme.

Payroll software will take the grunt work out of complying with your auto enrolment duties. Ensure you choose a payroll solution that is cost effective, has auto enrolment functionality included in the package, has no limitations on the number of employees that can be added and offers free phone and email support. BrightPay can automate the employer duties for you with ease. Take the hassle out of auto enrolment and avoid a fine by using BrightPay payroll. Read our payroll reviews to see just how happy our customers are.

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