Skip to main content

Your browser is out of date, and unable to use many of the features of this website

Please upgrade your browser.

Ignore

This website requires cookies. Your browser currently has cookies disabled.

Postponement: An explanation of how to apply postponement

Automatic enrolment detailed guidance for employers no. 3a

 

Accompanying resources

Information to workers  
Summary of information requirements in a quick-reference table format

The different types of worker
Diagram of the different categories of worker and the criteria for each category

Employer duties and safeguards
At-a-glance summary of the duties and safeguards

 

Printing this guidance

If you wish to print this guidance, you can do so directly from your web browser. Click the ellipsis (dots) in the top right corner (the icon may vary depending on your browser) to bring up the page options and select 'print'. Pages will be properly formatted for your printer.

Printing AE detailed guides

About this guidance

This guidance is aimed at professional advisers and employers with in-house pensions professionals. Trustees, managers and pension scheme providers should also familiarise themselves with how postponement operates.

This guidance is the first in a subset of guidance on the assessment of a worker. The process of making the assessment is described in Detailed guidance no. 3 – Assessing the workforce. To understand the content in this guidance, employers should have already read the following guidance in this series:

Regardless of when the assessment is carried out, an employer will know, as a result of the assessment, whether the worker is an eligible jobholder, non-eligible jobholder or entitled worker. Detailed guidance no. 3b – Having completed the assessment describes the next steps for an employer once they have completed the assessment process. Employers should read 3b in conjunction with this guidance.

We recognise that many employers will already have pension provision for their workers, and that this will often match or exceed the minimum requirements contained in the duties. In these cases, such employers may just need to check that the minimum requirements are covered in their existing processes.

‘One month’ means ‘one calendar month’ throughout this guidance.


Many workers will already have pension provision

It will be helpful to employers to be familiar with the different categories of workers. These are explained in detail in Detailed guidance no. 1 – Employer duties and defining the workforce and a quick reminder is available in the Key terms.

This guidance forms part of the latest version of the detailed guidance for employers (published June 2021). 

Changes from last version

This guidance has been updated to:

  • remove out of date content regarding postponement at staging date for employers that had staging dates between 2012 and February 2018
  • incorporate some of the content on postponement at the end of the transitional period for schemes with defined benefits from guidance no.3b of the previous version, which has been retired as the transitional period ended on 30 September 2017
  • minor editorial changes have also been made since the last version.

Paragraph numbers have changed as a result of these amendments.

There are a number of decisions an employer should make

Introduction

1. An employer must assess each member of their workforce to identify into which category of worker they fall. This will determine what duties the employer will have in relation to each of those workers. The different categories of workers and the employer duties are set out in Detailed guidance no. 1 – Employer duties and defining the workforce.

2. Postponement is optional for an employer. Postponement is described as ‘postponement of automatic enrolment’, and sometimes referred to as a ‘waiting period’. Essentially, postponement is the postponement of the assessment of the worker at certain dates and therefore a postponement of whichever employer duty may apply, depending on the category of worker. The assessment is postponed until a date of the employer’s choosing known as the ‘deferral date’.

3. Postponement does not affect the steps an employer must take in carrying out the assessment. The process of assessing the workforce is explained in detail in Detailed guidance no. 3 – Assessing the workforce. Employers should read this in conjunction with this guidance.

4. The way an employer exercises the choice to use postponement in relation to a worker is to give that worker a written notice that they are using postponement.

5. An employer can only choose to use postponement on certain dates. They can use postponement on:

  • the first day of employment of any worker including the start date of the first worker employed (the employer’s duties start date)
  • the date a worker employed by them meets the criteria to be an eligible jobholder on or after the employer’s duties start date1

It is important employers understand the process

6. Postponement is not available at automatic re-enrolment for any employer.

7. As a result of the assessment, the employer will know whether the worker is an eligible jobholder who must be automatically enrolled. Detailed guidance no. 3b – Having completed the assessment describes the next steps for an employer as a result of the assessment.

Before using postponement

8. There are a number of decisions for an employer to make before using postponement.

9. The first of these is to decide from which of the dates set out in paragraph 5 they wish to use postponement.

10. They should make this decision in advance. This is because the deadline for issuing the postponement notice is six weeks and a day from which they wish to use postponement. If the notice is not given before the end of this period, postponement cannot be applied.

11. When making this decision, an employer should consider the outcome they wish to achieve through using postponement. Postponement gives an employer the flexibility to align the administration of the employer duties to their existing business and payroll processes.

12. This flexibility means an employer could use postponement to:

  • align automatic enrolment with their existing payroll processes, eg to avoid calculation of contributions on part-period earnings, or to maximise the amount of the opt-out period that falls before payroll is run
  • smooth the process of the automatic enrolment duty in respect of workers with rare spikes in earnings
  • smooth the process of the automatic enrolment duty in respect of short-term workers who leave soon after starting work, or workers who trigger automatic enrolment just before ceasing employment
  • facilitate contractual joining into a salary sacrifice arrangement

13. In addition, an employer can choose to use postponement in respect of one worker, some workers or all of their workforce.

14. Having decided that they are going to use postponement, the employer now needs to decide on:

  • the ‘deferral date’ and
  • if using postponement at their duties start date, whether they want to use postponement in respect of one, some or all of their workers

The deferral date

15. The deferral date is the last day of the postponement period. It is key for the employer as it is the date on which they must assess the worker and it must be included in the postponement notice.

16. The deferral date is a date of the employer’s choosing up to three months and a day from:

  • the first day of employment, if they are choosing to use postponement on the first day of employment in respect of any worker
  • the date the criteria to be an eligible jobholder are met, if they are choosing to use postponement on the day a worker employed by them meets the criteria to be an eligible jobholder on or after the employer’s duties start date

17 Employers should note that ‘months’ means calendar months. For example, if the employer’s duties start date is 1 October, the latest possible deferral date they can choose is 1 January.

Choosing a deferral date

18. An employer can choose their deferral date to suit their existing processes and their reason for choosing postponement.

19. If, for example, an employer is using postponement to avoid part-period calculation of contributions, they should ensure the deferral date is the first day of a pay reference period.

20. If, however, they are choosing to use postponement for short-term workers who leave soon after starting work, they may wish to choose the latest possible deferral date.

The workers to postpone

21. Generally, postponement is in respect of a single worker. On some occasions, an employer may have groups of workers starting employment on the same date and on these occasions, they can use postponement for a group of workers. This may be true of a new employer at their duties start date. This could be used to help with the administration of the new duties for these workers.

22. Where an employer is using postponement in respect of a group of workers, each individual worker must be provided with a postponement notice. It is not possible for one notice to cover several workers.

23. If the employer plans to use postponement for all their workers in employment on their duties start date, they still need to ensure that they are taking the necessary steps explained in Detailed guidance no. 2 – Getting ready, to ensure they are ready for the new duties at the end of the postponement period.

Carrying out postponement

24. The first step for an employer in carrying out postponement is to give the worker or workers a postponement notice.

The notice

25. The postponement notice tells a worker:

  • that automatic enrolment has been postponed
  • the deferral date
  • that on the deferral date, if they meet the criteria to be an eligible jobholder, they will be automatically enrolled, and
  • about the right to opt in to an automatic enrolment scheme for jobholders and the right to join a pension scheme for entitled workers

26. The information the employer must give is as follows:

Mandatory information to be included in a postponement notice

  • a statement that the employer has deferred automatic enrolment until the deferral date (and the deferral date must be given)
  • a statement that the employer will automatically enrol the worker into an automatic enrolment scheme if, on the deferral date, the worker is aged 22 or more but less than state pension age and earnings of more than the earnings trigger for automatic enrolment are payable to the worker
  • a statement that by giving written notice to the employer, the worker who is aged at least 16 and under 75 and:

a. who earns more than the qualifying earnings lower threshold and is a not an active member of a qualifying scheme, may opt in to an automatic enrolment scheme and will be entitled to employer’s contributions; or
b. who earns not more than the qualifying earnings lower threshold and is not an active member of a pension scheme, may require the employer to make arrangements for the worker to become an active member of a pension scheme

  • a statement that a written notice from the worker must be signed by the worker or, if it is given by means of an electronic communication, must include a statement that they personally submitted the notice

27. A template for the postponement notice is available for you to use. This template is one way that an employer may choose to communicate the information. An employer may add their own wording or use their own templates as long as the underlying requirements in the table above are met.

28. The postponement notice contains the information about the right to opt in to an automatic enrolment scheme for jobholders and the right to join a pension scheme for entitled workers, so if an employer has given the worker a postponement notice they will have discharged this information requirement as well. There is no need to give a separate communication about these rights.

29. Prior to 1 April 2015 information about the right to opt in and the right to join was included in some but not all of the postponement notices available to an employer. If an employer chose to use the tailored postponement notices the requirement was to give information about the right relevant to the particular worker at the time they were being postponed i.e. only information about the right to opt in or only information about the right to join. However, under the amended requirements, an employer can choose to give either:

  • only information about the right which is relevant to the worker being postponed, or
  • information about both the rights, irrespective of which one is relevant to the worker

30. This choice is available to allow an employer with a staging date before 1 April 2015, using the tailored postponement notices under the previous requirements, to minimise the change to their existing systems and processes and continue to give information about the right relevant to the worker.

31. Where an employer makes use of this facility and the worker is a jobholder who is not an active member of a qualifying scheme, then the statement required in the fourth bullet in the highlighted section above is substituted with:

A statement that the jobholder may, by giving written notice to the employer, require the employer to make arrangements for them to become an active member of an automatic enrolment scheme and that the jobholder will be entitled to employer’s contributions.

32. Where the employer makes use of this facility and the worker is an entitled worker who is not an active member of a qualifying scheme, then the statement required in the fourth bullet in the highlighted section above is substituted with:

A statement that the worker may, where they are working or ordinarily work in the UK and are aged at least 16 and under 75, by giving written notice to the employer, require the employer to make arrangements for the worker to become an active member of a pension scheme.

33. Nothing prevents an employer including the enrolment information that must be issued to an eligible jobholder who is being automatically enrolled, in a combined notice, so that all the information requirements are discharged in one go (unless opt in or re-enrolment occurs). More information about the process of automatic enrolment can be found in Detailed guidance no. 5 – Automatic enrolment.

34. In this instance, an employer should consider the appropriateness of adding this information to the postponement notice for their workers. This includes a judgement about the ability of the workforce to absorb the level of detail in one go, and about the relevance of the information to the worker. In making the judgement about the relevance of the information, an employer should consider:

  • how sure they are that the worker is or will be in the future an eligible jobholder, and
  • the length of time between the planned giving of the information and the likely automatic enrolment date – the date information will become relevant, (see example 1 below)

Example 1

Deliver to You Ltd has recruited a new operations manager, Amir, who is 42 years old. Amir will be starting work on 21 September. His basic salary will be £24,000. John runs the HR department at Deliver to You Ltd and knows that the first day of employment is one of the assessment dates and that he must assess to see if Amir is an eligible jobholder.

Deliver to You Ltd has chosen to use the definition of a pay reference period aligned to the period by reference to which a worker is paid their regular wage or salary for the purposes of the assessment of the worker. Deliver to You Ltd pays its staff monthly in respect of the work done in the calendar month. The relevant pay reference period for Amir is the pay reference period from 1 September to 30 September.

In this period, because Amir only starts work on 21 September, the qualifying earnings payable to him are £600. This is below the monthly earnings trigger for automatic enrolment. In his first full pay reference period (1 October to 31 October) his qualifying earnings will be his usual monthly salary of £2,000, which is above the monthly earnings trigger for automatic enrolment.

John knows that if he were to assess him on 21 September, Amir would be a non-eligible jobholder and he would be required to provide him with information about the right to opt in to an automatic enrolment scheme for jobholders and the right to join a pension scheme for entitled workers and assess him again on 1 October. On this date, Amir would be an eligible jobholder and automatic enrolment would be triggered shortly after giving Amir information about the right to opt in or join a pension scheme.

John decides to use a short postponement period. He decides on the deferral date of 1 October. On 21 September, he issues Amir with the postponement notice (which includes the information for a jobholder about their right to opt in) together with the enrolment information for automatic enrolment. On 1 October, Amir is an eligible jobholder and John has six weeks in which to complete the steps for automatic enrolment (see Detailed guidance no. 5 – Automatic enrolment).

Giving the notice

35. The notice must be given in writing. ‘Giving’ information, in the regulator’s view includes:

  • sending hard copy information by post or internal mail
  • handing over hard copy information by hand
  • sending information in the body of an email
  • sending information in pdf attachments or other attachments by email

36. ‘Giving’ information does not include merely signposting to an internet or intranet site, attaching a URL or displaying a poster in the workplace. In these circumstances the employer is merely providing the worker access to the information about the duties but is not giving the actual information.

37. Someone acting on the employer’s behalf, such as an independent financial adviser, benefit consultant, accountant or bookkeeper can send the information, but it remains the employer’s responsibility to make sure it is given, on time, is correct and is complete.

38. Where an employer is giving information to a worker by post, they should allow sufficient time for the delivery of the letter in the ordinary course of post, in order that the information can be given before the end of the specified time limit for giving information.

39. The notice must be given by no later than six weeks and a day from:

  • the first day of employment, if they are choosing to use postponement on the first day of employment in respect of any worker
  • the date the criteria to be an eligible jobholder were met, if they are choosing to use postponement on the date that the worker meets the criteria to be an eligible jobholder.

40. The notice can be given ahead of the duties start date or worker’s first day of employment. It cannot be given if the date the criteria to be an eligible jobholder falls on an occasion on or before the deferral date of a postponement period that the employer has applied to the same worker at their duties start date or the worker’s first day of employment (see paragraphs 42 to 45)
Making the assessment on the deferral date

41. On the deferral date, the employer must assess each member of their workforce to identify into which category of worker they fall. This will determine what duties the employer will have in relation to each of those workers.

42. As part of this assessment, the key criteria the employer must identify are:

  • the worker’s age
  • whether the worker is working or ordinarily works in the UK under their contract, and
  • whether qualifying earnings are payable in the relevant pay reference period

43. The process of making the assessment is explained in Detailed guidance no. 3 – Assessing the workforce.

44. As a result of the assessment, the employer will know whether the worker is an eligible jobholder who must be automatically enrolled (see example 2 below). Detailed guidance no. 3b – Having completed the assessment describes the next steps for an employer at the end of their first assessment process. There are also a number of flowcharts that show the assessment process and postponement.

45. It is important to note that if on the deferral date the worker meets the criteria to be an eligible jobholder, the employer must automatically enrol the worker. It is not possible to apply a further postponement period to that eligible jobholder.

46. If the worker does not meet the eligible jobholder criteria on the deferral date, the employer must continue to assess the worker on the first day of each subsequent pay reference to identify the next time that the eligible jobholder criteria are met.

Example 2: Postponement at duties start date

Rivets Steel Ltd employs 3,200 workers. They already have pension provision for their workers and take up of membership is about 40%.

The duties start date for Rivets Steel Ltd is 1 November. This is a busy time of year for them as their financial year ends on 31 December. They have chosen to use postponement in respect of all their workers until 1 February when there will be more time and resource available to focus on the new duties they will have in respect of their workers.

On 1 November, they issue a postponement notice to all their workers.

On 1 February, Rivets Steel Ltd assesses all of its workers. As a result of that assessment, they know which of their workers are eligible jobholders, which are non-eligible jobholders and which are entitled workers. Rivets Steel Ltd must automatically enrol their eligible jobholders with effect from 1 February.

As they have given a postponement notice, they do not have to provide information to workers not being automatically enrolled about the jobholders’ right to opt in to an automatic enrolment scheme or the entitled workers’ right to join a pension scheme. They will need to continue to assess these workers to identify if the criteria to be an eligible jobholder are met.

Using postponement more than once

47. If the worker does not meet the eligible jobholder criteria on the deferral date, then the next time that they do, the employer can choose to:

  • automatically enrol the eligible jobholder, or
  • apply another postponement period of up to three months2 
  • if any of the conditions for the exceptions from the automatic enrolment duty are met, exercise their discretion to not automatically enrol the worker. (More information on the exceptions can be found in Detailed guidance no. 1 – Employer duties and defining the workforce)

48. The same rules for postponement apply in any subsequent application of postponement as they do in the first application. So if the worker meets the criteria to be an eligible jobholder on a deferral date, the employer must automatically enrol the worker. It is not possible to apply a further postponement period to that eligible jobholder. However, if they do not meet the criteria then the employer must continue to assess the worker and may choose to apply a postponement period the next time the eligible jobholder criteria are met.

49. It is important to note that postponement cannot be used more than once if those periods were to overlap. The employer cannot give a postponement notice if the date the criteria to be an eligible jobholder are met falls on an occasion on or before the deferral date of a postponement period that the employer has applied to the same worker at their duties start date or the worker’s first day of employment.

50. In other words, where an employer has used postponement at their duties start date or the worker’s first day of employment, and the worker meets the criteria to be an eligible jobholder during the postponement period (including the deferral date), they cannot use postponement again to extend the postponement period (see example 3).

Example 3: where the employer has a duties start date

SED Publishing’s duties start date is 1 April and it decides to use postponement in respect of all of its workers to defer automatic enrolment until 1 July. They choose the last possible deferral date of 1 July.

On 27 May, Darren, who earns £25,000, turns 22. This is the first date that Darren meets the criteria to be an eligible jobholder.

SED Publishing cannot issue another postponement notice on this date that would postpone automatic enrolment for three months and one day to 27 August 2014.

What next?

Having completed the assessment on the deferral date, the employer will know what category of worker or workers they have. Detailed guidance no. 3b – Having completed the assessment contains the next steps for an employer and should be read in conjunction with this guidance. The process of making the assessment is explained in Detailed guidance no. 3 – Assessing the workforce.

Key terms

Summary of the different categories of worker

The table below is a quick reminder of the different categories of worker. These are explained in detail in Detailed guidance no. 1 – Employer duties and defining the workforce.

Category of worker Description of worker
Worker An employee or someone who has a contract to perform work or services personally, that is not undertaking the work as part of their own business.
Jobholder

A worker who:

  • is aged between 16 and 74
  • is working or ordinarily works in the UK under their contract
  • has qualifying earnings
Eligible jobholder

A jobholder who:

  • is aged between 22 and state pension age
  • has qualifying earnings above the earnings trigger for automatic enrolment
Non-eligible jobholder

A jobholder who:

  • is aged between 16 and 21 or state pension age and 74
  • has qualifying earnings above the earnings trigger for automatic enrolment
    or
  • is aged between 16 and 74 • has qualifying earnings equal to or below the earnings trigger for automatic enrolment.
Entitled worker

A worker who:

  • is aged between 16 and 74
  • is working or ordinarily works in the UK under their contract
  • does not have qualifying earnings

Footnotes

[1] Postponement cannot be used at this date in the case of certain workers to whom the employer had applied the transitional period for schemes with defined benefits. These are:

A. A worker:

  • who had the transitional period for schemes with defined benefits applied to them at the employer’s staging date
  • for whom the transitional period was in effect for the full period up to and including 30 September 2017 (ie the employer did not end it early)
  • who did not meet the eligible jobholder criteria on 1 October 2017 or the deferral date if postponement at the end of the transitional period was used, and
  • who meets the eligible jobholder criteria on a date after 1 October 2017 (or the deferral date if postponement at the end of the transitional period was used)

OR

B. A worker:

  • who had the transitional period for schemes with defined benefits applied to them at the employer’s staging date
  • for whom the transitional period was ended early before 30 September 2017 (ie the employer did not end it early)
  • who did not meet the eligible jobholder criteria on 1 October 2017 or the deferral date if postponement at the end of the transitional period was used
  • who meets the eligible jobholder criteria on a date after 1 October 2017 (or the deferral date if postponement at the end of the transitional period was used), and
  • the employer is automatically enrolling into an automatic enrolment scheme where the worker will only accrue defined benefits

References throughout this guidance to ‘schemes with defined benefits’ in relation to the transitional period for these schemes includes both defined benefit pension schemes and hybrid pension schemes where a defined benefit pension is offered

[2] Postponement cannot be used in the case of certain workers to whom the employer had applied the transitional period for schemes with defined benefits. These are:

A. A worker:

  • who had the transitional period for schemes with defined benefits applied to them at the employer’s staging date
  • for whom the transitional period was in effect for the full period up to and including 30 September 2017 (ie the employer did not end it early)
  • who did not meet the eligible jobholder criteria on 1 October 2017 or the deferral date if postponement at the end of the transitional period was used, and
  • who meets the eligible jobholder criteria on a date after 1 October 2017 (or the deferral date if postponement at the end of the transitional period was used)

OR

B. A worker:

  • who had the transitional period for schemes with defined benefits applied to them at the employer’s staging date
  • for whom the transitional period was ended early before 30 September 2017 (ie the employer did not end it early)
  • who did not meet the eligible jobholder criteria on 1 October 2017 or the deferral date if postponement at the end of the transitional period was used
  • who meets the eligible jobholder criteria on a date after 1 October 2017 (or the deferral date if postponement at the end of the transitional period was used), and
  • the employer is automatically enrolling into an automatic enrolment scheme where the worker will only accrue defined benefits