Auto-enrolment and Employment Updates

September 2012
Forthcoming changes to employment legislation

National Minimum Wage

On 1 October 2012, the main rate for the National Minimum Wage increases from £6.08 to £6.19 per hour. The ‘youth development’ rate for workers aged 18 to 20 and rate for workers aged 16 and 17 stay the same at £4.98 and £3.68 per hour respectively.

Pensions – Auto-enrolment

New pension obligations, commonly known as 'auto-enrolment', are also coming into effect on a phased basis from 1 October 2012, initially for the largest employers with 120,000 or more employees. Small and medium sized employers will follow over the next six years.

Under auto-enrolment, employers will have to auto-enroll eligible employees, and make mandatory employer contributions, into a qualifying workplace pension scheme. From their staging date, employers must auto-enroll eligible employees into a pension scheme when they reach the income tax threshold but contributions will kick in only from the employee threshold for national insurance contributions.

Employers will be able to operate a three-month postponement window for all employees (i.e. newly eligible existing employees and new employees), so that employees on short-term contracts do not need to be auto-enrolled in a pension scheme, although they will be able to opt in voluntarily during the postponement period.


In order to find out their staging date, an employer needs to know:

• how many people are in the employer’s PAYE scheme

• the employer’s PAYE reference.

Further information and auto-enrolment staging dates can be found on the Department of Work and Pension website at:

http://www.thepensionsregulator.gov.uk/employers/staging-date-timeline.aspx

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

Top