Auto-Enrolment: What You Must Do If You Employ Anyone

SiteKiln gives you plain-English information, not financial or legal advice. If you need help setting up auto-enrolment, The Pensions Regulator has free step-by-step guides and tools at thepensionsregulator.gov.uk.

‍‌‌‌​​‌‌​‌‌​‌‌​​‌‌‌‌​​‌​​‌​​​​​‌‌‍# Auto-Enrolment, What You Must Do If You Employ Anyone

If you employ people, auto-enrolment is not optional. The fines are big enough to hurt. Set it up once, do it properly, and it mostly runs in the background with your payroll.

1. Who actually has to auto-enrol

If you employ at least one person, you have auto-enrolment duties. They kick in from the day your first member of staff starts, your "duties start date."

You must automatically put staff into a pension if they:

• Are aged 22 to State Pension age
• Normally work in the UK
• Earn more than £10,000 a year from you (the "earnings trigger" · frozen at £10,000 for 2025/26)

There is no exemption for family. If your son, daughter, partner, or any other family member is on PAYE and meets the age and earnings criteria, they are treated exactly like any other worker. This catches a lot of small construction firms off guard.

The only exception is a true one-person company · a single director with no other staff and no employment contract. If that's you, you can tell The Pensions Regulator (TPR) you're exempt. But the moment you add another worker · including a second director with a contract · auto-enrolment applies.

2. Earnings trigger and contribution rates

Earnings thresholds (2025/26)

Pension contributions are calculated on qualifying earnings · the portion of pay between £6,240 and £50,270. Not on total pay, unless your scheme uses a different basis (some do · check with your provider).

Minimum contributions

You're allowed to pay more than 3%. If you cover the full 8% yourself, your staff don't have to contribute anything from their own pay (unless they want to). Some employers do this as a recruitment and retention tool, it's a selling point when you're competing for good tradespeople.

What that looks like in practice

For a worker earning £30,000/year:

• Qualifying earnings: £30,000 - £6,240 = £23,760
• Employer minimum (3%): £712.80/year (£59.40/month)
• Employee minimum (5%): £1,188/year (£99/month · of which £237.60 is tax relief)
• Total into the pot: £1,900.80/year

3. Choosing a pension scheme

You need a scheme that's "qualifying" for auto-enrolment. In practice, small construction firms pick from a handful of big, low-hassle providers:

NEST · the government-backed scheme designed specifically for auto-enrolment. Can't refuse you. Low charges (1.8% contribution charge + 0.3% annual management charge). Default choice for a lot of small employers who just want it done.

The People's Pension (run by B&CE / People's Partnership), not-for-profit, widely used in construction. Historically the construction industry's own pension provider. Low charges, simple setup.

Other options: NOW: Pensions, Aviva, Standard Life, Royal London, Scottish Widows. All have auto-enrolment-compliant schemes. Compare charges and ease of use.

The Pensions Regulator doesn't tell you who to use, but they do say: if you're stuck, NEST is a safe fallback. It was built for exactly this.

4. Postponement, breathing space for new starters

You don't have to enrol everyone the day they start. There's a mechanism called postponement:

• You can delay auto-enrolment for up to 3 months from your duties start date or from the date a worker first becomes eligible
• During postponement, you don't have to make contributions

Useful for:

• Probation periods (you don't want to set up a pension for someone who leaves in week 2)
• Seasonal workers with short contracts
• Workers whose earnings fluctuate around the £10,000 trigger

But you must:

• Tell the worker in writing that you're postponing, within 6 weeks of the postponement start
• Reassess them at the end of the postponement period · if they still qualify, you enrol them then

Postponement is a delay, not an opt-out. You can't keep rolling postponements to dodge the duty.

5. What happens if you don't comply

The Pensions Regulator has real enforcement powers. This is not a "they'll never check" situation.

Escalating enforcement:

TPR has used enforcement powers in over 500,000 cases over the last decade. They actively monitor and pursue non-compliant employers, especially in sectors like construction where non-compliance is common.

You must also submit a Declaration of Compliance to TPR, even if you don't have anyone to enrol (because staff are under the trigger or have opted out). Missing the declaration is itself a compliance failure.

Inducement is illegal. You cannot offer someone a pay rise, bonus, or any other incentive to opt out of the pension. Under the Pensions Act 2008 (s.54), inducing or encouraging opt-outs is a criminal offence.

6. Re-enrolment every 3 years

You don't just set it up once and forget it.

Every 3 years from your duties start date, you must:

1. Reassess all eligible staff who previously opted out or stopped contributing more than 12 months ago
2. Re-enrol them into the pension scheme
3. Write to them explaining they've been re-enrolled and that they can opt out again if they want
4. Submit another Declaration of Compliance to TPR

This is called cyclical re-enrolment and it's a legal duty, not optional. Workers can opt out again, but you have to offer every cycle.

Set a calendar reminder for your re-enrolment date. TPR will write to you, but don't rely on their letter arriving on time.

7. Family members and sole directors, clearing up the myths

"It's only family, does it count?"

Yes. If your company employs family members on PAYE and they meet the age and earnings criteria, you must assess and auto-enrol them the same as anyone else. There is no blanket family exemption under the Pensions Act 2008.

This includes your spouse doing the books, your child working weekends, your parent helping out on site. If they're on PAYE and earn over £10,000/year from you, they qualify.

"I'm just me in a limited company, what then?"

If you're a sole director with no staff and no employment contract: auto-enrolment doesn't apply. Tell TPR via their online exemption process.

If you're one of two or more directors and at least one has an employment contract, or if you hire any other staff on PAYE, the duties kick in for all eligible workers, including directors with contracts.

If you have CIS subcontractors only (no PAYE staff): auto-enrolment doesn't apply to CIS subs. They're not your employees. But the moment you put someone on PAYE, even part-time, you're in scope.

8. Step-by-step setup for a small firm

Step 1: Work out your duties start date

It's the day your first employee started work. If you've had staff for years and never set up a pension, your duties start date has already passed and you're already behind.

Step 2: Use The Pensions Regulator's online tools

Go to thepensionsregulator.gov.uk and use their "Duties Checker" and step-by-step guides for new employers. It's genuinely well built and walks you through everything.

Step 3: Choose a pension scheme

NEST, The People's Pension, or another qualifying provider. Sign up as an employer and get your scheme reference number.

Step 4: Assess your staff each pay period

Work out who is eligible (aged 22 to SPA, earning over £10,000/year from you). Your payroll software may do this automatically.

Step 5: Auto-enrol eligible staff and start contributions

Enrol them into your chosen scheme. Deduct employee contributions (usually 5% of qualifying earnings) and pay your employer contribution (at least 3%). Both go to the pension provider each pay period.

Step 6: Write to your staff

Within 6 weeks of their enrolment date, send each worker a letter explaining:

• Whether they've been enrolled or not (and why)
• How much will be deducted
• Their right to opt out (within 1 month for a full refund of contributions)
• Their right to join if they weren't auto-enrolled

TPR provides template letters on their website, use them.

Step 7: Complete your Declaration of Compliance

Submit to TPR via their online form within 5 months of your duties start date. This tells them you've done what you're supposed to.

Step 8: Keep records and re-enrol every 3 years

Keep records of who you've enrolled, who's opted out, and all contributions paid. Note your re-enrolment date and repeat the cycle.

What to do next

1. Check your duties using TPR's Duties Checker at thepensionsregulator.gov.uk
2. Choose a scheme · NEST is the simplest starting point (nestpensions.org.uk)
3. Set up contributions through your payroll software or accountant
4. Write to your staff using TPR's template letters
5. Submit your Declaration of Compliance within 5 months
6. Set a calendar reminder for your 3-year re-enrolment date

Sources

• Pensions Act 2008 (auto-enrolment duties, s.3 employer duties, s.54 inducement offence) · legislation.gov.uk/ukpga/2008/30
• The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010 · legislation.gov.uk/uksi/2010/772
• The Pensions Regulator, Employer Duties and Guidance · thepensionsregulator.gov.uk/en/employers
• The Pensions Regulator, Compliance and Enforcement Bulletin · thepensionsregulator.gov.uk/en/document-library/enforcement-activity
• DWP, Automatic Enrolment Review 2017 (thresholds and policy) · gov.uk
• Automatic Enrolment earnings thresholds 2025/26 · thepensionsregulator.gov.uk

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