Your client has tasks that they must complete in order to comply with their automatic enrolment legal duties, as soon as they employ their first member of staff.
If your client becomes an employer for the first time on or after 1 October 2017, they will immediately have legal duties for their new member of staff. These duties apply from the first day the first member of staff started working for your client. This is known as their duties start date.
Your client must comply with their duties straight away.
Introduction to automatic enrolment for new employers
When someone is about to employ a worker for the first time, they need to take certain steps in preparation for taking on staff, such as determining whether they need to register as an employer with HMRC, or taking out liability insurance. Getting ready for automatic enrolment is just one of these steps.
As soon as your client's new member of staff begins employment, your client should be ready to comply with their legal duties.
You should make sure your client knows what they need to do to be ready when their duties start. We have help and guidance available according to the tasks your client will need to complete in order to comply with their duties.
You and your client can get started by telling us who should be their point of contact for automatic enrolment.
Clients without PAYE schemes
If your client has missed their duties start date, they still need to work out what their automatic enrolment duties are, if they haven't already done so, and immediately comply with them.
They may need to backdate contributions for members of staff that need to be put in a workplace pension, to make up for any missed contributions.
What your client needs to do will depend on how late they are in setting up a pension scheme.
If your client is less than six weeks after their duties start date
When your client has chosen their pension provider, they'll need to put their staff members into the pension scheme and start paying into it.
Your client must backdate their member of staff's scheme membership to the day that they first met the age and earnings criteria to be put into a scheme.
To do this, they may need to backdate contributions as well.
Postponement can also be used to delay working out who to put into a scheme, which will mean that your client won't need to backdate contributions. They can postpone assessing their staff for up to three months, which will give them extra time to meet their legal duties if they need to do this.
If your client is more than six weeks after their duties start date
If more than six weeks have passed since your client's duties start date before they set up a workplace pension scheme, they will need to take certain steps in line with their automatic enrolment duties.
Your client will need to pay any contributions that they should have made back to the date their member of staff met the age and earnings criteria to be put into a pension scheme. They will need to work out what these contributions are and backdate them.
Postponement cannot be used in this case.
How to backdate contributions
Your client should take the following steps to backdate any missing contributions:
- When your client sets up their pension scheme, they should tell the scheme provider that they need to backdate contributions. Your client may wish to check if their provider can help them calculate the amounts they need to repay, and tell them what they need to do to make these payments.
- Your client will need to work out how much they will need to backdate and from when. Payroll software can help them with this if it is already set up for automatic enrolment. If your client is unsure, they should check with their payroll provider.
- They should re-run their payroll process for the period back to when their member of staff should have been put into a pension scheme - the day when they first met the criteria for automatic enrolment. This should give your client the contribution amounts that need to be backdated. They can also use our online contributions calculator to help them estimate their costs for each member of staff.
- As the employer, your client must pay any unpaid employer contributions and their staff members must pay theirs, unless your client chooses to pay it for them. As part of any enforcement action we may require that your client pay their staff member’s contributions as well as their own. Your client should let their staff know what they are doing.
- Your client will then need to let their pension scheme know the amounts of unpaid contributions. The scheme provider may let them, and their staff, pay this in instalments, but your client will need to check with their scheme if this is an option.
- Depending on what your client has agreed with their pension provider, they will need to start making contributions.
- Your client needs to pay the employer and staff contributions into their chosen scheme on an ongoing basis, each time they run their payroll.