Workplace Pensions Auto Enrolment update and duties for Personal Service Workers
The Pensions Regulator issued an update to their guidelines in April 2017 and so I thought it appropriate to review the present situation. It is expected that a large number of employers will require help to set up their Workplace Pension schemes, to assess their workers, issue all the notifications, process payments, and to meet their ongoing obligations. All established employers with ‘workers’ will be staging by the end of September.
Starting payments to workers earlier may mean your Staging Date is delayed until 2018
From 1st October 2017, new employers will have immediate duties from the date they make their first PAYE payment to an eligible worker. Perhaps surprisingly, if your first PAYE payment is between now (1st May) and 30th June then your Staging Date will be 1st January 2018, and if it’s between 1st July and 30th September the Staging Date will be 1st February 2018. So an early commencement of payments to workers may result in Workplace Pension duties not starting until 2018.
Employers without payroll schemes have a Staging Date of 1st April 2018
Employers will usually have Workplace Place duties if they have workers with Qualifying Earnings, currently £113.00 or more per week. Ordinarily employers would also require a Payroll Scheme for these workers. However, recent changes in employment practice have brought a lot of publicity around the practice of engaging Personal Service Workers. You may have heard stories about Uber, and Deliveroo, but there are I’m sure many other lower profile situations where Personal Service Worker are engaged. Examples might be courier companies, security firms, and road surfacing gangs, training companies, or catering service providers.
Many of these organisations will not have a payroll scheme as they will be owned and managed by a sole trader or director without an employment contract and so the obligation to have a payroll scheme or to have Auto Enrolment obligations may not appear to exist.
How many ‘employers’ engaging Personal Service Workers are aware of their duties under the Pensions Legislation?
Employers without a payroll scheme have a Staging Date of 1st April 2017 and I wonder how many ‘employers’ without schemes who engage Personal Service Workers are aware of their duties under the Pensions Legislation?
Personal Service Workers are those workers who are not in business themselves, and therefore not truly self-employed, but who are also without a contract of employment. The Pensions Regulator lists on page 9 of their guidance the criteria for determining a ‘worker’. I contacted the Pensions Regulator to ask when these businesses have obligations to carry out their Workplace Pension duties and it took some time to get an answer! The regulator decided that the obligations would commence from 1st April 2017 for established businesses, and from the later dates given above for those newly established.
As the Pensions Regulator’s records of employers are all based on notifications from HMRC of the existence of payroll schemes then it may well be that non-compliance with Auto Enrolment duties will be unnoticed until perhaps a PAYE investigation or similar, but of course the fines for non-compliance could by then be very substantial.
Pennine Accounting are specialists is this area
If your business needs any advice around the status of your workers, or your obligations under the Workplace Pension regulations the please contact Pennine Accounting. We are specialists in this area and will advise and assist you with meeting your obligations. See our web page on Workplace Pensions and Auto Enrolment.