Sometimes it does. As a contractor or self-employed business person, you’re no doubt aware that the law on workplace pensions has changed, requiring employers with at least one member of staff to determine whether or not they have obligations under automatic enrolment.
For Director-only companies, the number of workers subject to automatic enrolment if the company’s only staff are Directors without contracts of employment=ZERO.
Whilst the rules are complex, the pensions regulator provides an excellent interactive website to help guide you through the process.
The pensions regulator will also send you a letter on your automatic enrolment duties as a company.
The first step for an employer is to see if they employ anyone classed as a ‘worker’. To do this, you need to understand the contractual relationships.
A worker is defined as any individual who:
- works under a contract of employment (an employee), or
- has a contract to perform work or services personally and is not undertaking the work as part of their own business.
Note that a contract does not have to be in writing as it can be a verbal contract between the employer and the worker.
Anyone who has entered into a contract of this type with an individual is an employer and is required to comply with the new employer duties.
For small companies involving 1 or 2 people, here are some quick thoughts to help get this right:
1) If you’re the sole Director of the company with no staff working for you, then the company does not have automatic enrolment duties. You’ll only need to inform the Pension Regulator by writing to them after you receive their letter, which will set out your reference code as well as their address.
2) If you’re a husband & wife company with no other staff working for you, the answer depends on your roles & whether or not you also have employment contracts.
- If you are both Directors with employment contracts, you will have automatic enrolment duties. Following receipt of your letter you will need to designate a contact representing your company.
- If you are both Directors with none of you having an employment contract, the company does not have automatic enrolment duties
- If one of you is a Director and the other is not (effectively this is a staff member), subject to the staff member’s salary level there is a likelihood that either automatic enrolment or the “opt in” requirement applies.
Automatic enrolment can be complicated and we believe it is prudent to either contact the Pension Regulator for further guidance or to review their interactive website.
For more information, please contact Alex Orban from Russell Gibson on +44 (0) 1224 264999.