New obligations for employers to automatically enrol eligible workers into pensions are affecting more and more businesses. All employers will need to be fully compliant with the new regime as soon as they reach their specific staging date.
Automatic enrolment obligations will apply to employers in stages depending on the number of workers in their PAYE schemes on 1 April 2012. Generally, businesses with fewer than 500 workers will have staging dates of 1 January 2014 whereas those with fewer than 250 workers will have staging dates of 1 April 2014.
Prior to their staging date, an employer will need to:
- assess their workforce to determine which workers they are required to automatically enrol;
- decide on the pension scheme they would like to use;
- send the relevant data to their chosen pension provider;
- provide different prescribed information to each category of worker;
- update their contractual and policy documentation; and
- organise their payroll systems.
Given the amount of preparation before a staging date employers should take steps to comply as soon as possible. In particular, employers should ensure that they are also aware of and fully compliant with the obligations to safeguard workers from ‘prohibited recruitment conduct’ and ‘inducement’ which have applied to all employers since 30 June 2012.
Management of the Workforce
An employer’s workforce will be split into five broad categories: ‘eligible jobholders’, individuals who are active members of a ‘qualifying scheme’, ‘non-eligible jobholders’, ‘entitled workers’ and other staff. Each of these categories will have different rights.
Employer’s will be required to assess which category each member of staff falls into and provide each individual with specific information about their pension rights depending on their category. Accordingly, part of an employer’s preparation will be to design and organise a communications strategy with its workforce.
How an employer presents its obligations to its workforce will be very important for employee engagement and motivation. An employer could perhaps make the most of the changes by presenting its new obligations and the prescribed information in a positive way as part of a flexible benefits package.
Contractual & Policy Documentation
Employers will also need to address the pension changes in their employment documentation, including employee handbooks and policies, contracts of employment and/or workers contracts such as those for casual workers and agency workers.
However, employers should be cautious to avoid including too much information in any contract. If workers subsequently bring claims relating to their pension rights and/or the employer’s failure to comply with its obligations, the employer may have to defend breach of contract claims as well as statutory claims. Therefore, employers should seek legal advice when making changes to their contractual or policy documentation.
Employment Tribunal Proceedings
The automatic enrolment regime also provides workers and employees with specific rights of claim in the Employment Tribunals.
For workers this includes specific whistleblowing protection and a right not to suffer a detriment on the ground that he has, may or will have rights under the new regime, any action was proposed or taken to enforce those rights and/or the employer has been prosecuted to enforce those rights.
However, employees will have additional rights. For example, the dismissal of an employee will be automatically unfair if the reason (or principal reason) for their dismissal was on any of the above grounds. Therefore, employers should ensure that their managers are fully trained in relation to their new rights and obligations.
We would be happy to assist with any queries relating to preparing for automatic enrolment and/or your obligations and rights moving forwards. If you would like our assistance, please contact Deborah Warren on 0113 336 3328 or firstname.lastname@example.org.
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