Director of a Company With No Employees? Don’t Be Caught Out – Know Your Auto-enrolment Obligations!
If you are a sole company director with no other staff then you don’t have any auto-enrolment duties under the Pensions Act 2008 as you are not considered to be an “employer”. However, if you run payroll and have a PAYE code the chances are you have been assigned a staging date. In this case, you must notify The Pensions Regulator that “you are not an employer for the purposes of auto-enrolment”. If you do not notify them they will assume non-compliance!
You can notify them by completing the online form at https://automation.thepensionsregulator.gov.uk/notanemployer.
You’ll need your Letter Code (from any auto-enrolment correspondence), PAYE Reference and Registered Company Number. Alternatively, if you do not have a letter code you can send an email to firstname.lastname@example.org which will generate an auto-reply taking you through the notification stages.
If your company has a number of Directors but no other staff, and either none or only one of the directors have a contract of employment, then you also don’t have any auto-enrolment duties as you are not considered to be an “employer”. In this case, you should follow the instructions above to notify The Pensions Regulator that you are not an employer for the purposes of auto-enrolment.
Please note, however, that The Pensions Regulator recognise that a contract of employment can be verbal or implied, and therefore that a Director can be an employee even without a written contract of employment. Refer to the guidance here www.gov.uk/employment-status/employee to ascertain if your Director would also be considered an employee.
If more than one of the Directors are considered to be employees then auto-enrolment duties do apply.
This is clearly a very grey area! One piece of good news is that The Pensions Regulator has set out it’s approach to the enforcement of automatic enrolment duties in situations where it could be strongly argued that a Director is or is not an Employee as follows:
Our overall compliance approach is focused on educating and enabling employers to comply with the law. In the event that:
• we were investigating a director-only company for a failure to carry out any of their automatic enrolment duties, and
• there is no written contract of employment or other evidence of an intention to create an employer/worker relationship, between the company and a director or directors, we will not as part of our approach seek to argue that an implied contract of employment exists.*
If you are unsure if auto-enrolment duties apply to your company, please get in touch and we can assist you.
(*For the complete article please click: http://www.thepensionsregulator.gov.uk/automatic-enrolment-enquiries.aspx#s16874)