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Workplace Pension Guidance

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Many small employers have still to arrange their workplace pension schemes and register their scheme with The Pension Regulator, so here is some further guidance.

The Pensions Regulator send letters to all employers 12 months, 6 months and one month before their staging date, informing you of your duties. The Pensions Regulator website has an online duties checker you can complete to find out what you need to do and when.

If you have yet to choose a pension scheme and don’t know where to start, there is some information here which can help you choose a pension scheme, with a list of providers who can offer pensions to small employers. Not all schemes offer the same level of services and some will charge more than others.

If you already have an existing pension scheme, you will need to check with your pension provider whether it is a qualifying scheme for automatic enrolment. If not, you will need a separate scheme.

If your business only has directors and does not have any staff, you may be exempt, but it is important to check and if you are, you will still need to inform The Pensions Regulator that you are exempt. Again, the online duties checker will confirm what you need to do.

If you only have one employee with earnings under the threshold, you still have legal duties to meet. You will need to tell your staff about automatic enrolment as they can still choose to opt-in to a pension scheme. You will need to complete and submit a declaration of compliance to let The Pensions Regulator know what you have done to meet your duties.

The declaration of compliance must be submitted on time, within 5 months of your staging date, so do not leave it to the last minute and risk the chance of penalties or fines!

Childcare Vouchers during Maternity Leave

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One issue that causes employers a lot of anxiety is where a woman is receiving childcare vouchers (CCVs) as part of a salary sacrifice scheme and then goes on maternity leave. The business must continue to provide the CCVs during maternity leave and cannot opt the employee out of the salary sacrifice scheme.  However, the ruling on a case that recently went to the Employment Appeal Tribunal (EAT) determined that such an arrangement is not a “benefit” for the purposes of maternity leave legislation and therefore can be stopped during the period of maternity leave.  However, if CCVs are provided as a benefit in addition to salary then they must be provided throughout the ordinary and additional maternity leave.

Before employers take any steps to suspend CCVs during maternity leave, they should exercise caution and carefully check the wording of agreements that form part of a salary sacrifice arrangement

CCVs cannot be sacrificed from SMP

Declaration of Compliance

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Auto enrolment has meant more employers have now reached their staging date and thousands more will be staging in the next year. You may have chosen your pension provider, enrolled your employees and started to make the payments. This will now be an ongoing administrative process. However, your auto enrolment duties do not end there. You must complete a declaration of compliance with The Pensions Regulator (TPR) to confirm you have met your duties.

All employers with one or more staff have a legal requirement to complete a declaration of compliance. Even if you have only one employee who does not want to be in a pension scheme, you still have to enrol them into a scheme before they can ask to opt out and you will still be required to complete the declaration of compliance. Each employer has a deadline to complete and submit their declaration which falls 5 months after their staging date. If postponement has been used a declaration cannot be completed until after the postponement period has ended, but you can start the declaration in good time and save your progress and return to it at a later date.

The declaration is a secure online form. You will need to register with the Government Gateway as an employer, if you haven’t already, before you can complete a declaration of compliance. Once you have all the relevant information to hand it should take around 15 minutes to complete. There is a useful checklist of the information you will need to complete the declaration which you can download here. If you do not complete the declaration within 5 months of your staging date, the TPR are likely to take action which could lead to a fine.

No Employers NICs for apprentices under 25

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From 6th April 2016, the government have zero-rated the employer National Insurance for apprentices aged under 25. This is to encourage employers to employ more apprentices.

The employer must ensure the apprentice is in a statutory apprenticeship scheme. Via the Gov.uk website, there are a number of links the employer can use to check. Assuming the apprentice meets the conditions, the employer must also have evidence to obtain the relief which is a written agreement between the employer, the apprentice and the training provider or evidence that the apprenticeship is receiving government funding. The written agreement must detail a) the approved government apprentice framework or standard, and b) a start and expected end date for their apprenticeship scheme. The employer can be both employer and the training provider, as long as they have been approved by the Skills Funding Agency in England.

For payroll there will be a change of National Insurance category letter – H – apprentice standard rate contributions, aged under 25 and G – apprentices who are foreign-going mariner, aged under 25 years. There is already category M in place for anyone under 21 years of age in operation. There are no changes to employees’ National Insurance Contribution rates.

If you have any current employees that this new change may affect, you will need to provide evidence and inform your payroll provider.

Click here for more information on apprenticeships.

Have you thought about the National Living Wage?

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There will be a new National Living Wage for workers aged 25 and above, set at £7.20 per hour from April 2016, with the intention that it will reach £9 per hour by 2020.

The new National Living Wage will apply for pay reference periods starting on or after 1st April 2016. The pay reference period is usually the period of time for which a worker will be paid. So, for example, for weekly paid employees working a week in arrears, the first pay period that needs to be paid at the NLW will be for the week 4th to 10th April, payable on 15th April 2016.

With HMRC’s policy of naming and shaming offenders it’s worth bearing in mind that the penalties for non-compliance are high, so please review all your workers age and increase their pay accordingly.