Auto Enrolment Prosecutions

The Pensions Regulator (TPR) is bringing the first pensions auto-enrolment prosecution over allegations that a bus company deliberately avoided enrolling staff into a workplace pension scheme. Stotts Tours (Oldham) Limited has been accused of intentionally not enrolling its 36 employees into a workplace pension. Managing Director Alan Stott has also been individually prosecuted for “consenting or conniving” in the bus company’s offence, or allowing the offence to be committed by neglect.

Peter Stanway, our BackupHR™ legal expert comments:

Auto-enrolment legislation requires employers to provide eligible workers with a qualifying pension scheme, auto-enrol them into the scheme, and make minimum levels of contributions to the workers’ pensions. The requirements have been phased in since 2012; by February 2018, all employers will be covered by the requirement to auto-enrol workers in pension schemes.

Auto-enrolment legislation is enforced by the Pensions Regulator. Its formal powers include issuing compliance notices, conducting inspections and issuing penalty fines to employers. However, TPR can also initiate criminal proceedings against employers that “wilfully fail to comply” with the legislation, as well as directors who are implicated in any failure to comply with the law.

This is the first time that the Pensions Regulator has launched a prosecution for these specific offences, but in August a solicitor and the firm where he is a partner were ordered to pay more than £16,000 in fines and costs for refusing to give them documents which were required as part of a wider investigation. Employers that wilfully fail to comply with key auto-enrolment or re-enrolment duties, or fail to enable staff to opt in to pension membership may be convicted of a crime, and subject to a fine and/or up to two years’ imprisonment.

The TPR has been cracking down on companies and individuals it says have shirked their responsibilities toward their employees’ pensions. In August, it said it would prosecute Dominic Chappell for failing to provide information and documents it requested during its investigation into the sale of BHS. It has also begun carrying out spot checks to ensure employers are complying with their automatic enrolment duties. TPR are warning employers that ignoring the penalties, which they impose could seriously damage a business’ reputation, by virtue of being named and shamed’.
The latest development is to publish details of those who have paid their Escalating Penalty Notice (EPN) but remain non-compliant. They will also publish the details of those who failed to pay their EPN, and as a result have been made subject to a court order.

Despite the publicity to raise awareness there is still a high rate of non-compliance. For various reasons, including ignorance and unwillingness to recognise reality, some employers are still not doing what they should be. TPR has no time for excuses. It said that firms which, for example, found the online system too difficult to use, made a mistake, or had a sick member of staff would not get a free pass.

TPR is using a big stick for employers who are not doing what they should be, and using all the tools at its disposal, because bad employers gain an unfair advantage over their diligent competitors. Employees of smaller employers are not getting what they are entitled to. The message from TPR is clear: If employers do not comply, they will take action.

Actions:

  • If you are not sure about your staging date, find out and take action now
  • If your staging date is still due then start to prepare now
  • Do not encourage or coerce employees to opt out of the pension scheme
  • If you have started auto-enrolment, do an audit to check it is working properly
  • Cooperate fully with the TPR if they investigate

The guidance provided in this article is just that – guidance. Before taking any action make sure that you know what you are doing, or call us for specific advice.