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Advice to help you prepare clients for auto-enrolment by assessing their workforce.

Auto-enrolment will make it compulsory for all employers to automatically enrol eligible job-holders into a pension scheme and to make contributions into that scheme. Large employers have already started automatically enrolling staff into a pension scheme and from January certain employers with under 500 employees will need to follow suit.

The deadline for implementing this is known as the ‘staging date’ and these dates can be found on The Pensions Regulator website.

What an employer needs to do will depend on whether they employ someone the legislation classifies as a ‘worker’. The term ‘worker’ is specific and there are different categories of workers determined by a person’s age and how much they earn.

A ‘worker’ is defined as any individual who:

  • works under a contract of employment (an employee), or
  • has a contract to perform work or services personally (ie they cannot send a substitute or sub-contract the work) and is not undertaking the work as part of their own business.

Anyone who has entered into a contract of this type (sometimes referred to as a contract of service) with an individual is an employer and is required to comply with the new employer duties. This may include agency workers. Also employers may be based outside the UK.

If an individual does not work under a contract of employment, they may still be assessed as a worker for the purposes of the new duties if they have contracts to perform work or services personally. However, an individual who is paid a fee as a self-employed contractor under a contract for services is not normally a worker.

Employers should not rely solely on a person’s tax status when assessing whether they are a worker. An individual considered by HMRC as self-employed for tax purposes may still be classed as a ‘worker’ for auto-enrolment purposes if they are in fact working under a personal contract of service.

Further information can be found on ACCA’s Technical Advisory webpages which covers this subject and areas such as:

  • agency workers
  • exemptions from worker status
  • different categories of worker
  • employer duties for the different categories of workers
  • eligible jobholders
  • non-eligible jobholders
  • entitled workers
  • safeguards for workers.

Further guidance on this subject can be found in this ACCA podcast and on The Pensions Regulator website.

Article contributed by ACCA