PENSIONS - AND - PAYSLIPS
FAILING TO COMPLY WITH AUTO-ENROLMENT
The First Prosecution
In its first prosecution, The Pension Regulator (TPR) has singled out a small family owned business (a bus Company) and its managing director and they have been sentenced to pay more than £60,000 in fines and backdated pension contributions for failing to comply with auto-enrolment.
The Company and its managing director pleaded guilty to eight counts each of wilful failure to comply with automatic-enrolment duties under the Pensions Act 2008. It had failed to put its 36 employees into a workplace pension scheme, and payments should have been being paid from June 2015.
The managing director was accused of failing to comply by either consenting or conniving in the organisation’s offence, or allowing the offence to be committed by neglect. The financial penalty to a small business is potentially crippling. In this case the Company has been ordered to pay a £27,000 fine, £7,400 in costs and a £120 victim surcharge. In addition, it must pay £14,400 in accrued civil fines for failing to comply with auto-enrolment, and approximately £10,000 in backdated pension contributions for affected employees. The Company must continue to pay ongoing pension contributions or it will face further enforcement action.
The Managing Director has been ordered to pay a £4,455 fine and a £120 victim surcharge.
Wilful failure to comply with automatic-enrolment duties is a criminal offence, and the maximum sentence that can be imposed in a magistrates’ court is an unlimited fine. If the case had been heard in a crown court, the maximum sentence that could have been up to two years’ imprisonment.
The Second Prosecution
TPR is currently in the process of prosecuting a healthcare company and its managing director and again this is for trying to avoid providing their staff with a workplace pension.
The healthcare company and its managing director are accused of wilfully failing to comply with their automatic enrolment duties and of falsely claiming that they had enrolled 25 staff into a workplace pension scheme.
Other Enforcement Actions
In its compliance and enforcement bulletin for the period October to December 2017, TPR reports that for the year to December 2017, it has issued:
- 79,879 compliance notices,
- 32,211 fixed penalty notices of £400 and
- 6,770 EPNs. (Escalating Penalty Notice which can range (depending on the number of workers) from £50 a day to £10,000 per day).
What Does The Above Mean?
If you are not complying with auto-enrolment, you run the risk of the TPR taking action against you, including criminal prosecution. It is also significant that it is smaller employers who are in the headlines. Large organisations with adequate admin resources will be set up whereas for smaller employers’ auto-enrolment is an administrative headache for limited existing management resources. We urge all smaller and medium sized employers to make sure they are not next in line for a summons.
PAYSLIPS – A NEW REQUIREMENT (2019)
It is well established, that an employer is required to provide all employees, on or before payday, with a Payslip, whether provided in printed form, or more recently, in electronic (online) form. Similarly, it is well established that the payslip must show:
- The employee’s earnings before and after any deductions (e.g. Gross Pay and Net Pay);
- Statutory deduction amounts (e.g. Tax, National Insurance, Attachment of Earnings deductions / CSA deductions)
- Contractual deduction amounts (as agreed in writing by the employee, e.g. Trade Union Subs, Medical Insurance, Season Ticket loan, Gym membership)
- Method of payment (e.g. BACS transfer)
- The pay date
Many payslips also include the following, which are useful, but not essential or required by law:
- National Insurance Number
- Tax Code
- Pay rate
- Employee number
- Gross year to date figures
- Name of the Employer
- Tax reference/period number
The New Requirement
In February 2018, an amendment was made to the Employment Rights Act 1996 which means that in addition to the above, where the employees’ pay varies as a consequence of time worked, a payslip MUST state:
- the number of hours being paid, where wages vary according to time worked; either as an aggregate number of hours or as separate figures for different types of work (or rate of pay).
The legislative amendment comes into force on 6th April 2019. In most cases, where employees are hourly paid, you will be showing the paid hours already so the impact of this change may be minimised and any case you have a year to prepare for this new requirement. Consequently, you will need to maintain accurate records of the hours worked by your employees which you should already be doing for National Minimum Wage and Working Time Regulation purposes. Therefore all it means is; if you don’t already, you will need to include on the payslip the number of hours worked and for which you are making payment!