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This update was first published in the April 2012 UK edition of Accounting and Business magazine

The Pensions Regulator has published an updated version of its step-by-step guidance on automatic enrolment duties for large employers and their advisers.

The guidance, which forms part of the regulator’s suite of educational materials for all UK employers, has been updated to reflect changes brought about by the Pensions Act 2011 and recent regulations put before parliament.

The guidance highlights new employer duties and how they should be implemented. It contains:

  • An introduction to the new employer duties.
  • First steps to prepare for the new employer duties.
  • How to identify the different categories of workers.
  • An explanation of how to apply postponement.
  • Transitional period for defined benefit and hybrid schemes delaying automatic enrolment for eligible jobholders who meet certain conditions.
  • The next steps for an employer after the assessment.
  • Pension schemes under the new employer duties.
  • An explanation of the automatic enrolment process.
  • Opting in, joining and contractual enrolment.
  • How to process pension scheme membership outside of the automatic enrolment process.
  • How to process ‘opt-outs’ from workers who want to leave a scheme.
  • The new safeguards for workers.
  • Records that must be kept by law under the new employer duties.

In the section ‘An introduction to the new employer duties’, the definition of a worker is explored with the guidance stating that: ‘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 (ie they cannot send a substitute or sub-contract the work) and is not undertaking the work as part of their own business.’ It goes on to further explore the factors that determine if a contract is ‘for services’ or ‘for service’. It also comments that agency workers may be employees under the regulations even if they have a contract with the agency. The determining factor will be who is responsible for paying the worker.

Unsurprisingly the guidance advises that employers should not rely on the person’s tax status when considering if they are a worker and states that: ‘An individual considered by HM Revenue & Customs (HMRC) as self-employed for tax purposes may still be classed as a “worker” under the new employer duties legislation, if they are in fact working under a personal contract of services.’ The guidance then looks at the factors that will help determine if a worker is an employee.

Glenn Collins, head of technical advisory, ACCA UK

Last updated: 18 Mar 2014