The Pensions Regulator published guidance earlier in the year warning employers preparing for Auto-Enrolment (AE) that they could not rely solely on a person’s tax status or any other single factor to determine if they were a worker or self-employed.
There is now evidence from a number of actuarial consultants and legal firms that companies could be missing large numbers of eligible workers out of their auto-enrolment plans because they wrongly believe they are classed as self-employed or consultants.
Reports suggest that the audit of one client’s workforce had identified 1,000 extra eligible workers that the company did not realise would have to be auto-enrolled. Another audit at a firm uncovered an additional 500 people needing to be enrolled – increasing the total number by about 10%. This prompted comment that, “the best advice is that if it looks like a worker and smells like a worker, it is a worker.”
The designation of someone as self-employed doesn’t necessarily mean they are and other factors need to be considered including the number of hours and the location of work, the pay structure agreed and factors such as whether the person is provided with tools, a uniform or business cards.
The list of status indicators given by the Pensions Regulator is clearly not exhaustive and businesses are warned that in cases of doubt the watchdog would probably take the most cautious interpretation and class any group in question as workers.
We will continue to provide regular guidance in respect of Auto-Enrolment, however if you have any questions, please do not hesitate to get in touch