This document summarizes who is subject to and excluded from automatic enrolment duties in the UK. Certain individuals like directors without employment contracts, the truly self-employed, and office holders carrying out non-executive duties are excluded. Employers have some options to not enroll certain individuals like directors, LLP partners, and those in notice periods. The document also provides guidance on determining if contractors should be considered employees subject to automatic enrolment duties or excluded as self-employed.

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Industry liaison team
April 2017
Automatic enrolment
Who is subject to AE?
The information we provide is for guidance only and
should not be taken as a definitive interpretation of the law.

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Who is included in the automatic enrolment duty?

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Who is excluded?
Certain people are exempted from the AE duties, including:
• directors not working under an employment contract;
• a director who is working under an employment contract, where
they are the only employee in the company - but only for the work
they carry out for that company;
• office-holders who are not considered workers (eg non-executive
directors, trustees, elected members) - but they are only excluded
for the activities they carry out as an office holder;
• the (truly) self-employed.
* See additional slides on “Exceptions” for more details

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Employer option not to enrol
Employers may choose whether or not to automatically enrol or re-enrol
certain people*, if they trigger automatic enrolment, including:
•directors working under an employment contract;
• LLP partners who are not ‘salaried members’ under HMRC tax rules;
•people who are in their notice period;
•individuals who ceased active membership of a qualifying pension in the
previous 12 months;
•those with HMRC tax protected status for their pension savings.
Only the enrolment duty is optional, all other duties remain unchanged.
The individuals retain the right to ask to join or opt-in (except people
working their notice), in which case the employer is obliged to enrol them.
Even if the employer is able to choose not to enrol all of their staff:
•the employer still has to send the normal statutory letters/emails
•and make a declaration of compliance, at the usual time.
* See additional slides on “Exceptions” for more details
?

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Does your client have AE duties for any contractors?
The (truly) self-employed are excluded from automatic enrolment (AE), but
how is this determined?
To check if your client has any automatic enrolment duties for a contractor who
works for them and is not their employee, there is a 3 part test:
A.If the contractor is not truly self-employed, would your client be considered
the employer?
B.Does the contractor have to do this work themselves (a personal contract)?
C.Is the individual carrying out the work as part of their own business?

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Your client is considered to be the ‘employer’, for people who:
•are employed by your client (ie your client holds the contracts of employment)
or
•are directly contracted to perform work for your client and your client pays the
individuals (unless they are truly self-employed).
Note:
•If someone working for your client is employed by another company to do this
work (perhaps they are employed by an agency or their own limited company),
your client will not be considered the employer;
or
•if someone working for your client is not an employee - and is paid* for this work
by another business or agent (ie your client pays another person or organisation
for this work), then they will be responsible for the automatic enrolment duties if
any, not your client.
A) Is your client considered the ‘employer’?
*A payroll bureau that processes a payment on behalf of
your client would NOT be considered the employer.

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B) Does the contractor have to do the work themselves?
• Your client should not assume that a contractor working for them is exempt
from automatic enrolment, even if they say they are self-employed …
• They may not be truly self-employed for the work they do for your client, even if
they are truly self-employed for work they do for another client.
• Your client should consider if the contract (which could be written, verbal or
implied), allows anyone to do this work.
• So, is the individual named in the contract and expected to do this work, unless
they are unable to do the work themselves (eg they are on holiday or sick)?
 If the individual can freely subcontract or substitute somebody else, then
your client will not have any automatic enrolment duties for the individual;
 or, if they have to do the work, this is considered a personal contract and
the employer will then need to judge whether the individual is doing the
work as part of their own business.

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C) Is someone working as part of their own business?
If someone (who is not a director) is not an employee and has a ‘personal’
contract (ie are contracted to do the work themselves):
•The employer will need to consider whether the individual is working as part of
their own business or not.
• There are a number of factors that will help decide this. Does the employer:
–have control of the hours they work?
–provide any employee benefits (eg sickness or holiday pay)?
–bear all the significant financial risks in carrying out the work
(eg the worker is not financially responsible for their faulty work)?
–consider the individual to be part of their own organisation?
–provide what is required for the individual to carry out the work (eg tools)?
If most or all of the above are true, it would be reasonable to consider that the
individual is not undertaking the work as part of their own business and so are
subject to automatic enrolment.
•Otherwise, they are truly self-employed and are exempt.

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To tell us you are not an employer
• If an employer does not believe they are an employer because:
– it is a sole director company, with no other staff
– it is a company with more than one director, where no more than one
director has an employment contract (and there are no other staff)
– the company has ceased trading
– the company has gone into liquidation or has been dissolved
– they no longer employ people in their home (eg cleaners, nannies,
personal care assistants)
Tell us at
 https://automation.thepensionsregulator.gov.uk/notanemployer
• The tool is not for employers who:
– have no staff to enrol on their staging date, or
– for companies in administration or in non-terminal insolvency

10. DM 2750193 v7X These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.
To tell us you are not an employer
• If an employer does not believe they are an employer because:
– it is a sole director company, with no other staff
– it is a company with more than one director, where no more than one
director has an employment contract (and there are no other staff)
– the company has ceased trading
– the company has gone into liquidation or has been dissolved
– they no longer employ people in their home (eg cleaners, nannies,
personal care assistants)
Tell us at
 https://automation.thepensionsregulator.gov.uk/notanemployer
• The tool is not for employers who:
– have no staff to enrol on their staging date, or
– for companies in administration or in non-terminal insolvency