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Roll on auto-enrolment – are you prepared?

28 October 2015

Auto-enrolment requires employers to automatically enrol staff into a qualifying workplace pension scheme in the coming years. Each business will have a staging date for auto-enrolment depending on their size and number of employees, while many will have already completed the process. There is the option to postpone enrolling any individual worker by up to three months. This may offer the advantage of avoiding bringing seasonal workers into the scheme.

Under the rules, all eligible jobholders must be automatically enrolled into a qualifying workplace pension scheme. As such all farm workers will need to be assessed. If the worker is working under a contract of employment, aged between 22 and the state pension age, and earns £10,000 or more a year, then he will be eligible for auto-enrolment. Any worker has the right to opt out of a scheme, but must be enrolled in it first to enable them to do so.

Part-time workers who earn less than £10,000 can ask to take part if they want to and, if they earn more than £5,824, you will be obliged to make a contribution too. Those aged under 22, or over state pension age and still working, can also opt-in, although no contribution will be due from you.

In many cases, it will be easy to identify whether someone is an eligible worker. Permanent and temporary employees, including contract and agency workers, will count as eligible workers. Self-employed individuals and consultants or casual workers may or may not be caught, depending on the circumstances.

With farmers and farm businesses, many workers may be relatives, which can often lead to relaxed paperwork. However, auto-enrolment is not going to disappear; it is the law and therefore like all other businesses, farmers must implement pension plans before 2017 and ensure that any current pension provision is compliant with the new guidelines.

If you fail to prepare for auto-enrolment then you could face significant penalties from the pensions regulator. If a ‘statutory notice’ is issued for non-compliance and then ignored, farmers with between five and 49 workers will be fined £500 a day, and those with one to four workers, £50 a day.

Our employment team can advise farmers on their requirements for auto-enrolment, which includes assessing workers and employment contracts.Partner, Matthew Clayton – advises employers on the full range of employment law.

Matthew heads our employment team. Matthew trained and worked at a City of London law firm. He handles the full range of contentious and non-contentious employment law issues for clients. His particular specialisms include complex staff restructurings and employment issues concerning business transfers. Matthew is recommended by independent legal directory Chambers and Partners which describes him as ‘solutions-focused’ and ‘a solid and respected practitioner noted for his technical abilities’. 

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Matthew Clayton MA LLM (Cantab), CIPP/E
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