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There are few exclusions from Auto Enrolment responsibilities, but there are some scenarios whereby directors of a business may be exempt. Usually, this is because the director is not classed as a ‘worker’ and only firms who employ workers have duties under auto enrolment legislation.
Under the rules, a director is only classed as a worker if they have a contract of employment with the firm and there is at least one other person who also has a contract of employment at the same company.
A contract of employment does not have to be in writing and could be verbal or implied, but without one a director cannot be a worker and therefore will be exempt from auto enrolment.
If a director does have a contract of employment and they are the only person in the company one, then they are not classed as a worker. If a company consists of a single director it will not be considered to be an employer, irrespective of whether the director has an employment contract. Additionally, the firm will not be required to complete a declaration of compliance.
If a firm with one or more directors without employment contracts and without staff then they will not have any auto enrolment duties to fulfil. As a result, they will also not need to complete a declaration of compliance.
The Pensions Regulator (TPR) needs to be made aware of this scenario by letting them know that they're not an employer otherwise fines could be imposed.
Should a firm have staff other than a director, as an employer then they will have duties to adhere to under auto enrolment legislation. Even if they have staff who do not meet the age and earnings qualifying criteria, they should still ensure that they complete a declaration of compliance online to confirm they have met their duties.
If a firm decides that it doesn’t wish to enrol any eligible employed directors and they have no other eligible staff, then it does not need to set up a pension scheme. The firm will still be required to make a declaration of compliance online though.
As an employer, you may find the TPR website a useful source of information: http://www.thepensionsregulator.gov.uk/en/employers
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