How To Assess Workers for Auto Enrolment
Yep, it’s another blog post on auto enrolment and workplace pensions as it’s a tricky subject! This time we will look at the assessment process, which includes identifying workers, the difference between a jobholder and an entitled worker, then finally the different pensionable statuses and what action is required of each.
Each pay period all workers must be assessed as part the employer’s workplace pension duties. The category or status the worker falls under will determine what action, if any needs to be taken. Before we start with the assessment process though we first need to identify the ‘workers’.
What is a ‘worker’?
HMRC say a person is generally classed as a ‘worker’ if:
- They have a contract.
- Their reward is for money or a benefit in kind.
- They only have a limited right to send someone else to work (subcontract).
- They have to turn up for work even if they don’t want to.
- Their employer has to have work for them to do as long as the contract or arrangement lasts.
- They aren’t doing the work as part of their own limited company in arrangement where the ‘employer’ I actually a customer or client.
Once the employer has identified if they have a worker(s), they then need to understand if the worker is a jobholder or an entitled worker.
What is a jobholder?
A jobholder is aged between 16 and 74, usually works in the UK under contract and has qualifying earnings payable by the employer in the pay period being assessed. Jobholders can fall under one of two categories,
Eligible employees:
- Aged between 22 and SPA.
- Earn over £10,000/pa.
- Employee must be automatically enrolled.
- The employer must provide a qualifying workplace pension scheme.
- The employer must also contribute at least the current minimum contribution.
Non-eligible employees:
- Aged between 16 and 21 or between State Pension age (SPA) and 74, earns over £10,000 per annum, OR aged between 16 and 74, earns between £6,240 – £10,000 per annum.
- Employee not automatically enrolled.
- Employee can request to join a pension scheme.
- If employee requests to join a scheme the employer must provide a qualifying workplace pension scheme.
- The employer must also contribute at least the current minimum contribution.
What is an entitled worker?
Entitled workers are aged between 16 and 74, are usually working in the UK under contract and do not have qualifying earnings.
Entitled employees:
- Aged between 16 and 74.
- Earn less than £6,240 per annum.
- Employee not automatically enrolled.
- Employee can request to join a pension scheme.
- If the employee wants to join a scheme the employer must provide a pension scheme though this doesn’t need to be a qualifying workplace pension scheme.
- Employer doesn’t need to contribute to pension scheme if employee requests to join a scheme.
Assessment
With the information above you are now ready to assess your workers. You need to ensure you include the correct pay when making the assessment.
Pay types that must be included in assessment:
- Salary
- Bonus
- Commission
- Overtime
- SSP
- SMP
- Paternity pay
- Statutory adoption pay
Further Information
If a worker becomes eligible and then enrolled, even if they earn below the threshold to be eligible in any future pay periods, they continue to be eligible and enrolled within the scheme. If a jobholder or entitled worker is non-eligible or entitled, depending on their age and earnings, their pensionable status can change between pay periods.
If you have any questions about this article, or the payroll and workplace pension services we provide please get in touch.