Most business owners should now be aware of the impending rules for Workplace Pensions reform and, in particular, the auto enrolment requirements which for most small employers will be somewhen after 2015.
Most employees will be covered, however there are some exemptions – below are some important ones as they will impact on our typical clients – for detailed information, visit the Pension Regulators Website
One-person companies
~ If an individual is a director of a company and the company has no other employees, that individual is not a worker by virtue of any office that they hold or contract of employment under which they work. The company is therefore not subject to the employer duties in relation to that individual.
~ However, if the company takes on a second worker, and both the director and the new employee work under a contract of employment, then both the director and the new employee will be workers for the purposes of the employer duties and the company will have responsibilities in relation to both of them.
Office-holders
~ An office-holder is not normally a worker.
~ An office-holder has no contract or service agreement in relation to their appointment, nor
do they receive a salary or regular remuneration for their services.
~ Examples of office-holders who are not normally workers include:
• non-executive directors
• company secretaries
• board members of statutory bodies
• trustees.
People who are not “eligible jobholders” – an eligible jobholder is defined as workers who:
~ are aged between 22 and state pension age
~ are working or ordinarily work in the UK under their contract
~ have qualifying earnings payable by the employer in the relevant pay reference period that are above the earnings trigger for automatic enrolment (currently £7,4751).
However these non eligible workers do have a right to opt in.
Taken together these exemptions will take a lot of small companies out of the regime, eg:
~ director / owner and part time staff.
~ husband and wife companies (or any other multi director / shareholder scenario) where (i) there are no other staff members paid over the threshold and (ii) the directors / shareholders restrict their salaries and drawn dividends instead.
~ one person companies with family member as secretary, possible paid a small amount for admin.
Further clarification is still needed on a lot of the practical aspects of the above, but the exemptions for the very small owner managed business look promising.
NB since this post was written, TPR have clarified exemptions further.
http://www.thepensionsregulator.gov.uk/employers/What-if-I-dont-have-any-staff.aspx