How do seasonal workers fit in with auto enrolment?
With the summer season readily upon us, we take a look at the seasonal worker and how auto enrolment affects them and your business.
The workplace pension reform was introduced in October 2012 and affects all employers in the UK that have at least one worker. Auto enrolment is one of the employer's new duties under the workplace pension reform in that all eligible employees must be automatically enrolled into a qualifying pension scheme.
This also impacts those workers that are employed seasonally; too. The thresholds for auto enrolment:
- Not already in a qualifying pension scheme
- Aged 22 - State Pension Age (SPA)
- Earn over £10,000 in tax year 2015/16
- Ordinarily works in the UK
While you may think that someone working over the summer as a fruit picker for example may not earn enough to be eligible for auto enrolment, you could be wrong. The threshold broken down is currently £192 weekly or £833 monthly according to The Pensions Regulator (TPR).
As a working example, let's say that a 22 year old has gone home to their parents' from university for summer to work on a friends farm to gain some extra cash to go travelling. They work 30 hours per week on minimum wage.
National minimum wage is currently £6.50 per hour for workers over 21 (at the time of writing. We are aware of the increase to £6.70 in October 2015). This means that the farm's seasonal employee will earn £195 therefore making them eligible to be auto enrolled for that pay period where the employee and the employer will have to pay into a pension scheme.
Companies can use postponement to minimise the amount of admin work needed with seasonal workers. Postponement delays the assessment of a worker for up to three months. The employer needs to decide on a deferral date which is the last day of the postponement period. If the employer wants to do this, they must issue the employee with a detailed notice.
Postponement can be used more than once for a worker, provided that they are not an eligible job holder at the end of the postponement period. Find out more about eligible job holders, non-eligible job holders and entitled workers from TPR.
Another thing that needs to be taken into account is that while postponement will delay the enrolment process, it will not delay the assessment. Employees; temporary, seasonal or otherwise; still need to be assessed for auto enrolment eligibility to comply with the legislation.
The IRIS AE Suite™ can be used within your IRIS Payroll software to handle the assessment, categorisation and communication to the employees, all as a part of your payroll process.
Find out more about the IRIS AE Suite™ by booking a completely free product walkthrough by one of our auto enrolment experts.
Sit our Bite-Sized training session "Seasonal Workers and your Auto Enrolment Responsibilities"
Find out more about how you can deal with seasonal workers, what steps you need to take for postponement and what your full responsibilities are for auto enrolment in our latest Bite-Sized training webinar: