Employers could face £10,000 auto-enrol non-compliance fines
Employers will face fines of up to £10,000 a day if they persistently and wilfully breach their automatic enrolment duties.
From October this year, the UK’s largest employers will be legally bound to auto-enrol all eligible employees into an occupational pension scheme.
The Pensions Regulator will issue a ‘statutory notice’ - a written warning - if it believes an employer is failing to meet its auto-enrolment obligations.
A spokesman says if a statutory notice is ignored, TPR could levy a firm with a £400 fixed penalty notice.
If the firm continues to flout its obligations the regulator will consider issuing an escalating penalty notice.
Under the regulator’s EPN regime, firms with 500 or more employees will be hit with a daily fine of £10,000 while those with 250-499 workers will be fined £5,000 a day.
Companies with 50-249 employees will be fined £2,500 a day for persistent non-compliance.
The fines then drop significantly for smaller employers. Those with 5-49 employees will be fined £500 a day, while firms with 1-4 employees will receive a daily fine of £50.
All of these fines are not subject to a cap and will continue until the employer demonstrates willingness to comply.
Firms who persistently encourage employees to opt-out of a pension scheme will be hit with different fines. The regulator’s prohibited recruitment conduct penalty notice (PRCPN) regime imposes fines ranging from £1,000 a day for employers with 1-4 employees to £5,000 a day for those with 250 or more staff.
The Pensions Regulator chief executive Bill Galvin (pictured) says: “Every employer needs to play their part to make these pension reforms work, and our goal is to make that task as straightforward as possible.
“For those that do not engage, however, we want to make it clear there are consequences. We will apply the law fairly and where we find consistent or wilful non-compliance we will use our powers, so that employees do not miss out on contributions they are due.”