Automatic Enrolment was brought into force in April 2016 with the aim of reducing the shortfall in workplace pensions. Auto enrolment requires all employers to have an eligible pension scheme that they must enrol their eligible staff into and they must also make a 3% contribution to that scheme.
To be eligible for automatic enrolment staff must be aged between 22 and the state pension age and earn over £10,000 per year. This includes all employees whether they are permanent or temporary. If staff don’t fall into this category, they still have the choice to opt into the auto enrolment scheme as long as they are between 16 and 74 and earning more than £6,136 per year.
An employer or their pension provider must write to each member of staff to inform them whether they are eligible or not for automatic enrolment. This must be done within six weeks of the date that an eligible employee starts working or an existing employee becomes eligible.
Seasonal or temporary workers are eligible for auto enrolment and a pension scheme as long as they fall into the above age and salary categories. However, by their nature, seasonal and temporary workers are likely to have fluctuating pay-packets and therefore pension contributions can take a bit more thought and may need to be assessed at almost every pay run. The good news is most of the current payroll software solutions should calculate this for you.
However, employers can withhold the right to access the workplace pension scheme to seasonal or temporary workers if they know they are going to be working for less than three months. This is known as postponement. Postponement doesn’t
change the date your workplace pension obligations start from, it only delays when you have to assess whether your staff are eligible. If you opt to use postponement, you still need to write to those staff and tell them how it will affect them.
It is also worth noting that staff affected still have the right to opt in to a workplace pension scheme during the postponement period as well as after the three months as they meet the eligible criteria.
The implications of pension contribution will vary for each business. For help in relation to auto enrolment and your payroll requirements please get in touch with our payroll services team. They will be able to provide both insightful advice or even take care of everything for you, regardless of the size of your business.