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Auto Enrolment - Director Only Answer

Auto Enrolment - Director Only Answer

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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:-

•A director of a company is not classed as a worker, unless:
–the individual works for the company under a contract of employment

and

–there is at least one other person working for the company under a contract of employment
•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

-------

•If a company has no workers on its staging date, then it has no duties under automatic enrolment and would not need to set up a pension scheme or complete a declaration of compliance.  
•If the company has received a letter from us and they have no workers on their staging date, we ask that they inform our help desk by emailing: [email protected] with their PAYE ref.

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)

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blue sheep
By Nigel Henshaw
17th Mar 2015 09:08

thanks, very useful

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By Kazmc
17th Mar 2015 09:27

Great...

Thankyou, this is very helpful

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By CatsandDogs
17th Mar 2015 12:55

Thank you

That is exactly the question that I wanted answered but couldn't find anywhere on the official website!

Thank you.

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By StephenGuy
19th Mar 2015 12:49

Thank you

Clearly put and very helpful.

 

Thank you

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By Eve E
19th Mar 2015 12:54

Thank you for taking the time....
....this is very helpful!

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By CA-London
19th Mar 2015 12:54

thx

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By sumo69
19th Mar 2015 19:15


Extremely useful - many thanks.

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By Younis
20th Mar 2015 12:53

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.  

 

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Euan's picture
By Euan MacLennan
20th Mar 2015 14:30

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.

 

 

Thanks (3)
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By Younis
20th Mar 2015 14:48

Thanks Euan

It is really now crystal clear. 

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Della Hudson FCA
By Della Hudson
25th Mar 2015 17:13

Thank you

That helps

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By mumpin
25th Mar 2015 17:41

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?

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Replying to rockallj:
Euan's picture
By Euan MacLennan
27th Mar 2015 16:23

Office holder

mumpin wrote:

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.

Thanks (1)
By ChrisScullard
25th Mar 2015 18:27

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.

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My photo
By Matrix
25th Mar 2015 19:49

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? 

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Replying to ann domonkos:
Euan's picture
By Euan MacLennan
27th Mar 2015 16:16

@Matrix

Matrix wrote:

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.

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RedFive
By RedFive
27th Mar 2015 16:03

webinar available

The Pension Regulator webinar is now available as video on demand showing the slides alluded to above and the Q&A's afterwards.

https://registration.livegroup.co.uk/ae_business_advisers/ContentTabs/?c...

 

Thanks (1)
My photo
By Matrix
27th Mar 2015 16:22

Thanks but if the only employee earns <£10k then is a scheme needed?

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Replying to LAURA BUTLER:
RedFive
By RedFive
27th Mar 2015 16:24

Make a coffee and watch the webinar including the Q&A's. It's worth an hour of your time.

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By jjswjjsw
27th Mar 2015 19:00

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? 

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By stt
29th Mar 2015 11:05

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?

 

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RedFive
By RedFive
02nd Jul 2015 12:14

**UPDATE**

Thought I would update as the procedure to inform the Pensions Regulator has changed.

You can no longer email the details. Following received from AE:-

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"For individuals who are no longer an employer for the purposes of automatic enrolment, i.e. ceased trading or employers who are ‘director only’ companies, there is now an automated deactivation form which will require certain pieces of information to be provided. Upon submission of the required information, our records will be automatically updated and a confirmation email will be issued.

With this in mind, please can we ask that you provide us the details of exempt employers via our website – the form can be found here; https://automation.thepensionsregulator.gov.uk/notanemployer.

Please note that exemptions via email and letter notifications will no longer be processed"

----------------------

It's a two minute process following above.

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By chris.slaneyandco.co.uk
21st Aug 2015 14:30

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!!

 

 

 

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