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Employment lawyer Sarah Ozanne looks at the implications of the new pensions auto-enrolment system.
The pensions auto-enrolment regime is scheduled to begin from 1 July 2012 and will ultimately apply to all employers. The regime is being phased in over a five-year period. The "staging" date on which individual employers will become subject to the pensions-specific aspects of the regime depends on the number of employees the employer has in its PAYE system on 1 April 2012. The anticipated staging date for employers with 120,000 or more employees is 1 October 2012 (although employers can elect to bring their staging date forward). Employers with fewer than 50,000 employees are not expected to be subject to the new pensions requirements until January 2013 at the earliest. However, all employers should start to prepare now as, regardless of size, they will be subject to new employee safeguards when the regime begins.
Safeguards for workers
In addition to the new requirements on minimum pension provision, the regime introduces two new safeguards for workers: "prohibited recruitment conduct" and "use of inducements".
Prohibited recruitment conduct: The provisions on prohibited recruitment conduct make unlawful both the asking of questions and the making of statements by an employer at any point during its recruitment process that expressly state or imply that a job applicant's success is dependant on whether or not the applicant opts out of the pension scheme.
This safeguard is intended to prevent employers from screening out job applicants on the grounds of their potential pension entitlements under the new regime. Examples of such conduct include statements made in job advertisements, questions asked at interview and terms of employment offered. Employers should also watch out for inadvertent breaches of this safeguard by, for example, including an opt-out form as part of a general application pack.
Use of inducements: The second safeguard makes unlawful the use of inducements where the "sole or main purpose" is to induce a worker to opt out of a qualifying pension scheme. The key factor is the motivation behind the employer's actions; it is not relevant whether or not the inducement is successful. Clear breaches of this safeguard would include employers offering a salary increase or one-off payment in return for a worker opting out of a qua
