Auto-enrolment began 5 years ago for larger employers, but between now and 1st February 2018, it will be the turn of almost 80% of employers to enrol all of their eligible staff into a pension scheme- no ifs or buts!
It is essential that you get auto-enrolment right as failure to comply can lead to fines of thousands of pounds and even criminal prosecution.
Whilst there are obvious financial implications to auto-enrolment, HR will play a key part in implementation and compliance. Below are three examples of how HR can help you comply.
Auto-enrolment is compulsory and automatic unless the employee decides to opt out of the scheme. If the employee decides to exercise this right it must be done so voluntarily and without any inducement from the employer to do so. Although there is no specific definition of an inducement it can include actions such as offering a pay rise or other benefits in exchange for the employee opting out.
Special attention will have to be given to flexible benefits packages that some employers offer to their staff- HR will have to examine the packages and how they are offered to employees to make sure that they are not deemed to be inducing them to opt out.
Usually, unfair dismissal claims can not be made by an employee unless they have a minimum of 2years service. This does not apply in issues arising out of termination based on the enforcement of auto-enrolment rights, such cases will not require the usual qualifying period. Whistleblowing or detrimental treatment will also give rise to further protection.
Who is eligible?
Employers must enrol all ‘eligible’ employees, so it is natural to ask the question,’How do I know who is eligible?’ Identifying who is an ’employee’ may not be as simple as it seems, this can include many in the workforce who would normally not be classified as employees. Casual workers, for example, can be eligible for auto-enrolment. You may have employees that you would classify as self-employed sub-contractors but in reality, they may actually be employees in all but name and therefore should be enrolled.
Classifying your employees correctly is essential in making sure that you are fulfilling your duties as an employer.
Up to date?
It is important that all managers involved in the auto-enrolment process are trained on what they should and shouldn’t be saying or doing throughout the process.
Equally important is that HR documents are updated to reflect the new rules following auto-enrolment. All HR documents such as offer letters, employment contracts and employee handbooks will have to be updated to reflect the employees auto-enrolment entitlements. These documents are a crucial part of the employee/employer relationship- so it is the perfect opportunity to make sure that your documents are up to date with current law and HR best practice.
Plan ahead and get help!
Do not leave auto-enrolment to the last minute, start the wheels in motion sooner rather than later. Consider the HR issues and start updating your documentation, reviewing current clauses and communicating with your staff. Running a business isn’t easy, so get help if you need it- getting it wrong can be costly.
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