Am I exempt from Auto Enrolment if I have no eligible jobholders
Auto enrolment is affecting every business in the UK. Whether or not your clients have eligible jobholders will determine what employer responsibilities are required. It is important to understand that different Auto Enrolment duties are applicable when a company has no eligible jobholders.
Pension Scheme Set Up
If an employer has no eligible jobholders, it is not required to register with a workplace pension provider. However, it is advised to have a pension scheme in mind in case employees do become eligible or decide to opt in/join a scheme. If you do need to set up a pension scheme, this should not take a great deal of time, for example, registering with NEST can be done in 30 minutes.
With some payroll software providers, you need to have a pension scheme in place before you perform auto enrolment tasks. However, BrightPay will allow you to carry out the necessary tasks, such as assessing employees and issuing communications, without the need to have a pension scheme in place.
In the absence of eligible jobholders, it is still required to communicate with the non-eligible and entitled workers. These workers must be informed that they have the right to join a workplace pension scheme and that they will be automatically enrolled if they meet the criteria of an eligible jobholder.BrightPay will automatically create the relevant letter for each employee, ready for emailing, printing or exporting to PDF.
If an employee decides to opt in to a pension scheme, the employer must make arrangements for the employee to become an active member of an Automatic Enrolment scheme and make the relevant deductions and contributions.
Where the employer had no eligible jobholders, there would have been no requirement to set up a pension scheme in advance of the staging date. Therefore, when an employee opts in, the first step is to set up a pension scheme and register with the pension provider. The scheme will need to be in place with the employee enrolled within six weeks (joining window) of the employee’s enrolment date.
The enrolment date is the start date of active membership and so the calculation of contributions to the pension scheme must begin from this date. This means that contributions may need to be backdated if a pension scheme is set up at a later date. Generally the enrolment date will fall on the first day of the next pay reference period after the employer receives the opt-in notice.
If the employer has already closed the payroll for that next pay reference period when they receive the opt-in notice, then the first day of the subsequent pay period will be the enrolment date. If the employee opts in during the postponement period, the employee must be enrolled on whichever comes first, the deferral date or the employee’s enrolment date.
With auto enrolment many ongoing duties exist, regardless of whether or not you have eligible jobholders. Firstly, you must monitor all employees each pay period and enrol them if they become an eligible jobholder (i.e. if they turn 22 or if they exceed the earnings threshold). New employees must also be assessed and enrolled if necessary. Your payroll software should notify you of any changes to an employees AE status.
Depending on the selected pension scheme provider, a contributions file may be required each pay period, regardless of whether or not employees have been enrolled in the scheme.
Declaration of Compliance
If an employer does not have any eligible jobholders, it is still essential to complete the declaration of compliance within five months of the staging date. This is a legal requirement that shows the regulator that the employer has assessed employees and told them about auto enrolment.
Employers must also keep records and a full audit trail of assessment criteria, communications, opt-in requests and joining requests. If an employee opts in or joins the scheme, you must also record of enrolment dates, contribution amounts, and pension provider payment dates and amounts. Most of these records must be kept for a minimum of six years, with the exception of those relating to opt-outs, which must be kept for four years.
There are a number of auto enrolment duties to be completed, regardless of whether or not you have eligible jobholders. It is important to understand the breakdown of your client base so that you can plan for each client accordingly.
How can BrightPay help?
BrightPay have embraced auto enrolment and are providing a number of online resources to bureaus across the UK, including free auto enrolment webinars and guides. Book a demo with our sales team today to find out how BrightPay handles auto enrolment and how it can increase the efficiency of your bureau. You can also try out the software with a BrightPay 60 day free trial.
Written by Rachel Hynes for BrightPay Payroll and Auto Enrolment Software.