If you are intending to pay a Christmas bonus, employ temporary staff over Christmas, or your existing staff are working extra hours, be aware that this might cause issues with Workplace Pensions (Auto-Enrolment).
Every member of staff, even if only employed for one day, generates duties under the pensions auto-enrolment legislation. So, do not assume that short term workers can be ignored.
Below are some of the points you need to be aware of:
1. If you are a small “director only” company and therefore probably exempt, employing someone temporarily will create a requirement to comply with the legislation. Most employers in this situation will apply “postponement.” This means that they intend to postpone their workplace pensions duties for three months. That sounds good except that the temporary member of staff must receive a written communication within six weeks of starting, advising them of the postponement and giving them the option of joining a scheme.
2. If you already employ staff and the temporary employee is in addition, the same postponement rules apply and you may need to advise your pension provider.
3. If an existing member of staff works extra hours, this may take them across a threshold, so they become either “Eligible” or “Non-Eligible” triggering additional responsibilities.
4. Paying a Christmas bonus is common but beware. The bonus may take the employee above one of the thresholds. It may also trigger an additional NI charge, particularly for employees normally under the Lower Earnings Level. It may be better for both the employer and employee to spread any bonus over two or more pay periods.
Here is something to ponder, monthly pay is easier to control than weekly pay. Earnings are spread over a longer period. If a weekly paid employee earns extra in one week but is back to normal the following week, that “higher” week might have triggered an auto-enrolment action. If the employee had been paid monthly the two weeks would have “evened out” meaning that the threshold may not have been reached.
There are all sorts of potential dangers when employing additional staff or existing staff working extra at holiday times. It is best to think about these in advance because it is very easy to fall foul of the various pieces of legislation. If you would like to discuss this with our experienced and knowledgeable specialists, please get in touch on (01509) 816150 or by the contact form below.
You can read more about Auto enrolment and what it means for you, here.