Auto Enrolment rules and Directors
6th May 2022
We often get asked about auto enrolment rules and how they apply to company directors. Please see below for details.
- Directors without an employment contract
If a director does not have an employment contract, they cannot be a worker and are therefore always exempt from automatic enrolment
- Directors with an employment contract where there are no other members of staff
Even if a director does have a contract of employment, they are not classed as a worker if they are the only person in the company with an employment contract.
- Directors with an employment contract who are not the only members of staff
If a director has a contract of employment and is not the only person working for the company under an employment contract, they are not exempt. Depending on their age and earnings, they may qualify for automatic enrolment and the company will have the option to put them into a pension. If the company chooses not to automatically enrol a director who is or becomes eligible for automatic enrolment, the director will retain the right to opt in or join a pension. If such an organisation decides it does not wish to enrol any employed director who is eligible for automatic enrolment, and it has no other eligible staff, then it does not need to set up a pension scheme – but will need to make a declaration of compliance.
This is with regards to directors who are holding office as a director, not including a person who is a director in name only.
For more details or if you would like to discuss this, then please contact our Payroll team on 0116 2827000.