Smaller Employers: Auto Enrolment, Rule Tightening and Belt Tightening

As usual, the smaller employer is taking on the full burden of the implementation of government policy in both pension legislation and employment. The latest figures show a sharp rise in compliance notices and fines issued by The Pensions Regulator (TPR) for auto-enrolment non-compliance.

Between 1 October and 31 December 2015, TPR issued 2,596 compliance notices (compared with 469 in the previous quarter) and 1,021 fixed penalty notices of £400 (up from 107 between 1 July and 30 September).

A rise in notices and penalties was expected, with a growing number of smaller employers now required to fulfil workplace pension duties. Around 12,000 small and micro employers became subject to AE last summer. However, TPR says more than 90% of those who have reached their AE staging date have now complied with the law and so far 5.8 million people have been automatically enrolled into a workplace pension.

In addition to the burden of workplace pensions, the two year temporary reporting relaxation for smaller employers around the supply of Real Time Information will cease in April. This will mean tighter time frames and potential fines for submission of payroll data after the monthly payroll payment date.

As a final snub to smaller companies, the government has announced that it is restricting eligibility for the Employment Allowance so that limited companies with a single director, and no other employees, will be prevented from benefiting from the allowance of £3,000 from 6 April 2016.