Employers have a responsibility to set up a workplace pension for their staff. Failing to do so will result in an initial penalty, leading to ongoing fines and even a damaging court case if the situation goes unresolved.

As a small business owner, we know growing your company is the main objective. Dealing with monotonous pension schemes is not why you started up in the first place. However, it’s a necessary part of the process and something you can’t ignore for too long.

What may seem like a complicated procedure is actually relatively simple. However, if you are unsure of any steps, it’s best to consult a professional accountancy firm to eradicate possible mistakes.

As an employer, you need to enroll in the Workplace Pension for your employees

Automatic Enrolment

After the 2008 Pensions Act, it became law that every employer in the UK must put eligible staff into a pension scheme and then contribute towards it – this is known as automatic enrolment.

The regulations state you must pay at least 1% of your employee’s qualifying earnings into the workplace pension pot. These earnings can be calculated two ways; either the amount they earn between £5,824 and £43,000 per year, or their entire yearly wages (both before tax).

As a side note, the government is considering raising the contribution amount up to 3% in 2019 pending parliamentary approval. Your accountant can provide further details on how these changes will affect your company.

Staging Date

As an employer, your workplace pension duties first came into force on 1 April 2012, although this can differ depending on your circumstances. This is known as the ‘staging date’ and depends upon how many people were on your payroll at this time.

You should receive a letter stating your staging date

The government’s Workplace Pension ad campaign.

You should have received a letter informing of your specific staging date from the Pensions Regulator. If unsure, the official staging date calculator will let you know by entering your PAYE reference.


Even if you only employ one member of staff, they still qualify to be placed in the automatic enrolment scheme. This applies to every business sector in the UK, from domestic cleaners to construction engineers.

Employees who qualify under the workplace pension are those aged between 22 and the state pension age (this depends on the individual’s personal circumstances), who work in the United Kingdom and earn £10,000 at least per year.

Staff can actually decide to opt out of the workplace pension scheme should they chose to do so. However, the possibility to opt back in should always be present.

Enrolling in the Workplace Pension doesn't have to complicated if you have a little know how and help

Preparation and Penalties

Once you assess all eligible staff and work out your staging date, contributions will begin automatically at 1% of the expected earnings. It’s recommended to do this as early as possible so you’re ready to make contributions when required.

If you fail to comply with the workplace pension requirements, an initial £400 penalty will be issued against your business. This will then be compounded with further fines depending on the size of your company:

  • 1 – 4 employees = £50 per day
  • 5 – 49 employees = £500 per day
  • 50 – 249 employees = £2,500 per day

To meet your legal responsibilities for the workplace pension scheme, qualified advice should be sought to avoid these costly fines and comply with new regulations by the government. Your accountant will also be able to explain the tax implications and impact on your business going forward.

If you’d like to know more or make sure that your business complies, please get in touch.
If your business already complies with the pension scheme, then you might be interested in 10 Ways to Increase Productivity Within the Workplace.