The Pensions Regulator (TPR), the U.K.s pension watchdog, issued its first fines to employers for not meeting their automatic enrolment duties and issued 163 compliance notices, which was significantly higher than the handful issued in the previous quarter. According to its latest update on the use of its statutory powers, which covers the period July 1 to September 30th, three employers have been issued fixed penalties of £400. Peter Stanway, our BackupHR™ legal expert comments:
The fines were the first to be issued since the outset of TPRs compliance and enforcement activities for auto enrolment, began in July 2012. They were issued as a result of non-compliance with unpaid contributions notices or compliance notices.
Some of the issues identified were:
- Employers failing to realise that their staging date did not change when they opted for postponement.
- Not realising that workers had to be assessed at each pay reference period to see if eligibility criteria had been triggered.
- Employers registering on the government Gateway website and mistakenly believing this fulfilled their compliance duties.
The Regulator also recently published figures showing a fifth of smaller employers were unaware of their staging date and therefore at risk of non-compliance.
The Executive Director for AE at TPR said: As we deal with smaller employers otherwise known as EU holiday). EU holiday is only 4 weeks which is shorter than the UK entitlement of 5.6 weeks. This means that any employer who pays basic pay only during holiday is at risk of a claim for the value of supplemental payments which should have been paid during holiday.
- There is limited scope for workers to recover underpayments of holiday pay by way of an unlawful deduction from wages claim. It seems likely that few employees will be able to show that they have had a break of less than 3 months between periods of such EU holiday over a long period of time.
- Leave to appeal has been given on all the issues involved in this case.Given the significance of this decision Business Secretary Vince Cable announced he is setting up a taskforce to assess the impact of the judgment, leave it too late or do not comply at all. This type of non-compliance is not acceptable. We expect to see the number of times we need to use our powers increase.
This echoes the message of TPR chairman Mark Boyle, who outlined the challenges ahead for those employers staging between 2015 and 2018, highlighting support schemes as part of its educate and enable agenda. They aim to help small and micro employers through the auto-enrolment staging process, by engaging with bookkeepers and accountants. More than 1.5m employers are due to auto enrol between now and 2018.
We are familiar with the picture of many smaller employers struggling with auto-enrolment; it is clear that the Regulator is taking a tough line and will not take a lack of preparation as an excuse. Employers must address their legal obligations to avoid costly penalties.
Actions
- Find out your staging date using the Pensions Regulator, and TPR website
- Read all of the employer guidance provided free on the TPR website
- Talk to your existing pensions provider if you have one
- Do a financial assessment of your workforce
- Consider your remuneration strategy and decide whether you see pensions as a cost or a benefit
- Compile a project plan and allocate or contract out responsibilities
- If you are not willing or able to set up a better scheme investigate the three online options of NEST, NOW or the Peoples Pension.
We do not claim to be pension experts, but we do have considerable experience of advising clients on the potential employment issues, that can arise from auto-enrolment.
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.
