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Auto Enrolment Multiple Postponement

18 February 2015, Auto Enrolment, Charities, Companies, Employer, Sole Traders

Can an employer postpone automatic enrolment duties on multiple occasions in relation to the same worker?

Postponement is described as ‘postponement of automatic enrolment’ and sometimes referred to as a ‘waiting period’.  Essentially it means the postponement of the assessment of the worker and therefore a postponement of whichever employer duty may apply, depending on the category of worker.  The assessment is postponed until a date of the employer’s choosing known as the ‘deferral date’.  This allows an employer to delay duties for eligible jobholders for up to three months.  The employer can apply postponement:

  •   on the first day of employment for new workers starting after the staging date
  •   when someone becomes an eligible jobholder after the staging date

How postponement works

An employer can use postponement again (auto enrolment multiple postponement) the next time duties are triggered in relation to a worker, as long as he or she is not an eligible jobholder on the deferral date (the last day of the postponement window).  If the worker is an eligible jobholder on the deferral date they must be automatically enrolled into the qualifying pension scheme.

Example of postponement for 2 months

A worker who normally has earnings below the earnings trigger for auto-enrolment works overtime in November.  This jump in pay takes him over the threshold, which would trigger automatic enrolment.   The employer applies a two month postponement period, with a deferral date of 31 December because he knows that this increase is unusual and unlikely to be repeated.  On 31 December the employer reassesses the worker, who has not been paid for any overtime in December.  Qualifying earnings do not exceed the monthly qualifying earnings threshold so he is not an eligible jobholder.

The worker is paid a bonus in February, which again triggers auto-enrolment.  The employer can apply postponement again for up to three months.

Pay reference Period

It is important to remember that the qualifying earnings are calculated on the pay due in the reference period (a month in the case above), not on the actual timing of payment.  Overtime that is accrued in November, but processed and payable in December would be part of the qualifying earnings in December, not November.  Where administrative pay arrangements are made it is the underlying arrangement that dictates the calculation of the qualifying earnings.  If weekly pay of £100 were paid in advance to facilitate a holiday period with £300 paid in week 1 and nothing for the following 2 weeks, the amount recorded in each weekly reference period would remain at £100.

There is no limit to the number of times that an employer can apply auto enrolment multiple postponement as long as the employee concerned is not currently in a waiting period.

Alterledger can manage your auto-enrolment process

You will need to assess your workforce every pay period, with severe penalties if you fail to act properly.  This can be a complicated process and should be managed together with your general payroll procedures.  Alterledger can deal with all your payroll and auto-enrolment needs and save you time and money to spend on your own business.  Please get in touch using the form below for more information.

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