“Can a company be exempt from auto enrolment?”
This is a question that I have been asked dozens of times by directors of small and micro companies. “Do I have to do this?”
“Really….it’s only my wife and I in the company and I don’t want to set up a pension scheme.”
It’s also one the Pensions Industry has been trying to get its head around for a while now as the rules weren’t immediately clear.
As I’m sure we all know by now, every employer in the UK will have to set up and auto enrol eligible staff into a workplace pension scheme. The number of employers this will impact between now and 2018 is a staggering 1.8 million. To get the point across to employers and the public alike Workplace Pensions even has its own furry monster called Workie which is to be seen mainly in the ad breaks of Coronation Street.
Although research indicates that awareness of auto enrolment has increased amongst small and micro employers, The Pensions Regulator has to date issued over 1,295 compliance notices, 332 Fixed Penalty notices, and perhaps more worryingly 4 escalating penalties that can be between £50 and £10,000 per day (as at June 2015)
So is it possible that a company can be exempt from auto enrolment and the potential costs (or fines for non-compliance) that this entails?
In short the answer is yes.
Every company that receives a letter from The Pensions Regulator confirming their staging date will have to take some action, but if the company does not employ any workers then it is possible they can be exempted from the vast majority of the auto enrolment process. Exemption typically applies to companies that have only one director, or a number of directors and only one of which has a contract of employment. It can also include companies where there is only a director and a company secretary.
Companies will have to be clear about whether they do in fact employ any workers before gaining an exemption as it is likely The Pension Regulator will take action against them if any false or misleading information has been provided during the exemption process.
We’re here to help.
Article by Laurence Sanderson, Sterling & Law