Auto Enrolment For Companies

Automatic Enrolment Duties for Directors

There has been much debate and tweaking of procedures in respect of directors and whether they are to be included in the company automatic enrolment duties.

Directors were never intended to be targeted under the workplace pension and automatic enrolment requirements.  Recent changes included companies selecting to use director exception and excluding them from any assessment, but this still meant having to give each director letters to give them the option to join plus completing a ‘Declaration of Compliance’ with The Pension Regulator.

So here are the key facts:

One director companies

The Pensions Act 2008 says that directors are not treated as workers if they’re not employed under a contract of employment to work for the company.

A company with just one director and no other employees is exempt from automatic enrolment. What this means in practice is that they don’t have to complete a Declaration of Compliance or set up a pension scheme.

Companies with more than one director

Where there is more than one director but no one else is working for the company then it will depend on  the roles of each director and whether any of the directors are employed by the company under a contract of employment.

All are directors

  • If you all have employment contracts, the company will have automatic enrolment duties for all of you.
  • If at least two of you have employment contracts, the company will have automatic enrolment duties for all those who do.
  • The company won’t have any automatic enrolment duties if only one of you has an employment contract, or none of you has.

If some of you are directors and some are not

  • The company will have automatic enrolment duties for all those who aren’t directors.
  • If at least two of you have employment contracts (whether directors or not), the company will also have automatic enrolment duties for any director who has an employment contract.

Be aware though that if you notify The Pension Regulator that you are not an employer for automatic enrolment duties and then circumstances change and employees are taken on, you must inform The Pension Regulator immediately.

If you would like more information regarding automatic enrolment and what this means for you, please contact your usual payroll contact at Dodd & Co or speak to Julie Campbell on 01228 530913.

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