There are a number of duties that employers need to undertake to comply with automatic enrolment. Even if there are no eligible job holders, certain steps need to be followed. The responsibility of auto enrolment does rest with the individual employer. If an employer fails to comply the Pensions Regulator (TPR) will take action. They may issue you with a notice or penalty.

TPR will enforce penalties if the employer chooses to ignore their automatic enrolment duties. The enforcement action starts with statutory notices being issued to the employer. This is then followed by penalty notices and further non-compliance may lead to court action. TPR does want to work with employers to make sure they understand their employer duties.

In certain circumstances, where the employer genuinely did not understand their duties or due to unforeseen circumstances have not been able to comply, TPR will work with the employer to ensure compliance. However, those who do not carry out the AE duties in accordance with the law will face enforcement action and penalties.

Enforcement Action

The Pensions Regulator will investigate willful and non-willful non-compliance. They are within their rights to carry out inspections and request certain information from employers. TPR will enforce non-compliance in a number of ways:

• Informal action: TPR will correspond with the employer to issue guidance and help by telephone, email, letter and in person. The employer may be issued with a warning letter giving them a specific amount of time to become compliant with their AE duties.

• Statutory notice: TPR can issue statutory notices informing the employer that they must comply with their AE duties. The employer could also be directed to pay any contributions they have missed or were late in paying. TPR does then have the authority to estimate and charge interest on unpaid contributions which the employer must pay in addition to the missed contribution payments.

• Penalty notice: TPR has further authority to issue employers with penalty notices penalising deliberate and intentional non-compliance. If an employer fails to comply with instructions as per their statutory notice or if the employer deliberately breaks the law then a fixed penalty will be issued. The penalty notice is fixed at £400 to be paid within a certain time period.

• Escalating penalty notice: TPR can issue the employer with an escalating penalty notice for failing to comply with a statutory notice. If the employer receives this penalty notice they will be penalized with a daily rate of between £50 and £10,000. The value of the penalty depends on the number of employees an employer has.

• Civil penalty notice: TPR can issue a civil penalty notice when an employer fails to pay the contributions that are outstanding. If the employer receives this notice there are heavy penalties of up to £5,000 for individuals and up to £50,000 for organisations.

• Prohibited recruitment conduct penalty notice: Employers can be issued with a prohibited recruitment conduct penalty notice when an employer fails to comply with a compliance notice or if it is evidence of a breach. Depending on the number of employees, the penalty has a rate ranging from £1,000 to £5,000. TPR aims to fully recover all penalties that are issued.

Receiving a penalty notice

Employers can pay their penalties using TPR’s online payment service. Employers will need their penalty notice reference which is located on the front of the notice. It will be important to pay the penalty by the date displayed on the penalty notice. Failure to pay will result in the Regulator bringing formal legal proceedings against the employer to recover the penalty amounts. Failure to comply and pay penalties could result in criminal prosecution.

Legal Proceedings

TPR has the right to take civil action through the courts to recover penalties against employers. If the employer intentionally and willfully fails to comply with their auto enrolment duties, they may be prosecuted. TPR also has the right to confiscate goods where there is a criminal conviction and restrain assets during criminal investigations.

How to appeal

TPR allows employers to apply for a review if they have been issued with a notice. Employers must submit an application with supporting evidence within 28 days of the notice being issued. The Regulator will then inform the employer when a decision can be expected.

Employers can apply for a review once they receive any of the following notices or penalties; compliance notice; unpaid contributions notice; third party compliance notice; fixed penalty notice; escalating penalty notice; prohibited recruitment compliance notice or prohibited recruitment penalty notice. You can apply for a review online, by post, by telephone or in person. Visit TPR website for more info.

Avoid Penalties & Fines

Make sure you are prepared for your automatic enrolment duties. The Pensions Regulator advises employers and payroll bureaus to utilise payroll software that can cater and automate auto enrolment duties. It would be advisable to check that your current payroll system is compatible with your chosen pension scheme.