Auto Enrolment – Implications of Non-compliance

In the past few weeks, you have been given an insight into what auto-enrolment is, and what your duties are as an employer. You may, however, be wondering what happens if you don’t comply or fulfil your duties – so I thought I could cover them here for you.


Who is Responsible?

You, as an employer, are responsible for meeting your legal duties for auto enrolment.


What happens if I don’t comply?

If you don’t comply, you may face compliance notices, warning letters, penalty notices and fines – even prosecution in severe cases.


What kind of notices will I get?

Among other things, the Pensions Regulator may issue a compliance notice, an improvement notice or an unpaid contributions notice.

A compliance notice will tell that you have not met your duties, and give you a time frame in which you must become compliant, and tell you what steps you must take.

An improvement notice will come after you have received a warning notice and will say the same as a compliance notice, giving you a time frame for required compliance.

An unpaid contributions notice will be issued if the Regulator thinks you have failed to pay contributions into the pension.


What if I comply late?

You are expected to pay back any missed contributions to your staff to cover what they would have received, had you complied on time. This would include backdating contributions to your staging date. The Regulator may also estimate and charge interest on unpaid contributions, and recover unpaid contributions on behalf of schemes.


Should my employees backdate their contributions?

You as an employer are responsible for informing your staff that they have the option to backdate their own contributions to your staging date.


What will happen first?

You will first get a warning letter with a deadline for you to get up to date. If you don’t meet this deadline then you will be sent a statutory notice.

When you fail to comply with a statutory notice or to address any other issue, you will be issued with penalty notices.


What is the fine for fixed penalty notice?

The fine is fixed at £400 and must be paid within the period set out in the Penalty Notice.


Will my fines become higher if I still don’t comply?

Yes. If you still don’t comply with the above notices, you will receive an escalating penalty notice which gives you a new deadline to meet, after which the fines will be at a daily rate of £50 to £10,000, depending on the number of staff you have. The fine will continue to grow at the daily rate until you comply with the statutory notice.


Are there any other notices and fines?

Yes. You can receive a prohibited recruitment conduct penalty notice, which, if not complied with, results in a fine of a prescribed rate of £1,000 to £5,000, depending on the number of staff you have.


How will I pay my fines?

You can pay them online, and you will need your penalty notice reference number, and they must be paid by the date shown on the front of your penalty notice.


Will I get some time to pay a fine or penalty?

Yes. If you are having financial difficulties, the Pensions Regulator may agree to extend the deadline for payment. The claim would need to be supported by documents like bank statements, certified account ledgers, etc.


Can I appeal?

Yes, you can appeal, if you believe that you should not have been issued a notice.


How will I appeal?

Within 28 days of the date of the notice, must apply to the Pensions Regulator for a review of the notice. The same rule goes for an appeal against an escalating penalty notice.


What if I don’t agree with the revised decision after the appeal?

If you disagree with the revised decisions after an appeal for a fixed penalty notice, an escalating penalty notice and a prohibited recruitment penalty notice, you can appeal to a tribunal.


What is the timescale to apply to Tribunal?

You must make the appeal to the tribunal within 28 days from the date of the review decision letter.


How should I do it?

The appeal must be put down in writing with all necessary information to the Tribunal.

As an employer, you must make an effort to meet your auto-enrolment duties. Failure to do so and giving false information in a declaration of compliance will be considered as criminal offences, leading to prosecution.