All employers must assess their workforce carefully when dealing with their obligations regarding workplace pensions. If you were asked who is an employee and who isn’t?, the answer may seem obvious to most people, but one of the most important things that workplace pension regulations have provided is a set of definitions relating to employees, their status and their rights to membership of a pension scheme. They provide a framework within which a business can assess its workforce.
This assessment should follow a process which must;
Identify whether a person is a worker
A worker is defined as an individual who works under a contract of employment, or has a contract to perform work or services personally and is not undertaking the work as part of their own business.
So far so good, but some businesses will have to deal with definitions for personal service workers, agency workers, seafarers, secondees and offshore workers, in addition to volunteers, one person companies and office holders. If any of these categories cause a business to question what they need to do, professional advice is essential.
What type of workers do you have?
The regulations sub-divide workforces into the following categories:
Eligible jobholders - Automatic enrolment applies
They are eligible for automatic enrolment because they;
Non-eligible jobholders – Automatic enrolment does not apply
They are not eligible for automatic enrolment, but can choose to opt into a pension scheme. They are either;
Entitled workers – AUTOMATIC ENROLMENT DOES NOT APPLY
They are eligible to join a pension scheme, but are not eligible for automatic enrolment. They are;
The employer’s duties for each group of employees are different. Additionally, the solutions that the employer can use to satisfy their obligations can be different too.
The exercise of assessing the workforce is the employer’s first, and perhaps, the most important task in readying themselves for Auto Enrolment. Errors made at this stage can be corrected in future, but employers can be subject to penalties for failing to apply the appropriate regulations and processes to their workplace pension scheme. Additionally, employees have the right to complain directly to The Pensions Regulator if they believe there is any malpractice in their workplace pension scheme.
If you have any questions arising from this article, please do not hesitate to contact us.