If you’re a new employer, you’ll have had plenty to consider already:
  • Systemising your business so that you can work on strategy rather than in the business
  • Employing the right people
  • Training them
  • Deciding how you’re going to run your payroll

If you haven’t already, you need to add Auto Enrolment to the list. Automatic Enrolment was introduced in stages from 2012. Large employers were required to start enrolling their staff into a workplace pension scheme, followed not long after by medium and small employers. Now, every employer must enroll their employees into a workplace pension, as a compulsory requirement.

We get a lot of questions from confused business owners on their responsibilities, and so we’ve compiled a list of answers with the need-to-know facts.

Top questions you’re asking:

How does auto enrolment work?

The government have made major changes in how workplace pensions operate. In the past, it was up to workers to decide whether they wanted to join their employer’s pension scheme. Now, all eligible workers will be automatically enrolled into their employer’s pension scheme. It is automatic for staff, meaning they don’t have to do anything. But it isn’t automatic for the employer.

  • The Government has set minimum levels that the employer and the employee will pay into the workplace pension scheme
  • The Government will usually add money to the workplace pension in the form of tax relief
  • The Employee can opt out if they wish
  • Those not eligible can opt in themselves, if they wish

As a result, many more people will be able to build up savings to provide them with an income when they decide to retire.

So, how do I know if my staff are eligible?

Eligibility is split into three groups: Eligible Jobholders, Non-Eligible Jobholders and Entitled workers.

Employers will have to automatically enroll Eligible Jobholders, who:

  • Work or usually work in the UK
  • Are not in a qualifying pension scheme
  • Are aged 22 or over
  • Are under State Pension Age
  • Earn more than £10,000 a year (this figure will increase each year)

Employers will not have to enroll Non-Eligible Jobholders*, who

  • Earn over £10,000 per year but are aged between 16-21
  • Are between State Pension Age and 74 and earn between £5,772 and £10,000 per year

*However, they can choose to opt in to the pension scheme in which case the employer will have to contribute.

Employers will not have to enroll Entitled workers*who:

  • Are aged 16-74 and earning less than £5,772 per year

*However, they can choose to opt into the pension scheme, but the employer does not need to contribute.

Are Directors exempt from Auto Enrolment?

A company with just one director and no employees is exempt from auto enrolment. Where there is more than one director in the company, you will want to look at each separately and determine their worker status. It’s best to ask for advice on this one! (which you can do at the end of this article).

Can you avoid auto enrolment?

A big no! Auto enrolment is a mandatory requirement. Not only are there penalties for non-compliance, but willful non-compliance can actually lead to criminal prosecution. Penalties could also be incurred if a business attempts to entice employees to opt out or introduces restrictive recruitment practices.

The initial penalty for non-compliance is £400, followed by daily penalties increasing in size depending on the number of employees. See below:

Number of StaffPenalties
1-4£50 per day
5-49£500 per day
50-249£2,500 per day
250 plus£5,000 per day

If you’re new to employment, and you’ve got to this point in the article and you’re still unsure as to whether this applies to you – let us set the record straight.

Don’t put this of or forget about it because you could find yourself with a penalty that could crush your business or have your assets seized to pay off your debts. These are all realities that non-compliant businesses are already facing so let us help you make sure you’re not one of them.


21 Point Employer Checklist for Auto Enrolment

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You can also unload all the stress by having a chat with one of our dedicated AE team, who are ready to help you:

  • Create an action plan
  • Provide a report with recommendations of suitable pension providers
  • Assess your workforce and provide you with a forecast of the likely cost of Auto Enrolment to your business (Based on existing salary levels)
  • Manage your written communication with staff on your behalf, ensuring that your correspondence (which is mandatory) with Employees is compliant with The Pensions Regulator
  • Provide your chosen Pension provider with the contributions data required
  • With Payroll software training for businesses running their own payroll

Want to find out more?

Call us on (01474) 853856 and we will put you in contact with one of our advisers, or send us an enquiry by clicking below.

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