Employers must beware of anomalies around the treatment of contractors and groups of acquired employees when implementing pensions auto-enrolment.
Organisations that use contractors must identify whether such people are contractors or should be treated as workers for legal purposes. If they are classed as workers, they will need to be auto-enrolled into the organisation’s pension scheme.
Mark Baker, senior associate at law firm Pinsent Masons, said: “There was a recent court case involving a consultant doctor who was considered an independent contractor, but the court found that he had only worked at one hospital and the hospital referred to him in its publicity [materials] as one of its doctors. The court found he was a worker and so covered by the related employment law.”
Baker advised employers to base their decision on several key factors, including where the person is based and whether they are under the organisation’s control, for example, if it requests the individual to go to a certain site to work, can they refuse?
Employers could also run into problems when taking on a new group of staff, for example from an acquired organisation or under an outsourcing contract. If Transfer of Undertakings (Protection of Employment) (Tupe) regulations apply, the acquiring employer is legally obliged to match employees’ existing pension contributions up to 6%. This is higher than the minimum required under auto-enrolment, which could result in an organisation having two tiers of pension provision for staff.