Fri, 1 Jul 2011

Pension guidance law unclear

Employers with overseas staff risk being caught out by automatic pensions enrolment legislation because of unclear government guidelines, an employment lawyer has warned.

Guidance published by the Pensions Regulator in May - ‘Employer duties and defining the workforce’ - sets out how employers should identify which employees are required by law to be auto-enrolled into a pensions scheme.

It classifies those who work under a contract of employment or have a contract to perform work personally as covered by the Pensions Act 2008.

But Sean Saluja, partner in the employment division at Paull & Williamsons LLP, said advice was unclear for employers who posted staff on international assignments or rotational bases.

‘The position for employers is not clear,’ said Saluja. ‘The guidance deals with how a worker is classified compared to how an employee is classified, rather than employees’ or workers’ location. If you have an employer who is UK registered and pays through UK payroll, there’s a risk they will be caught by auto enrolment, even for employees who are working overseas.’

Saluja said there was time for the government to clarify the issue before autoenrolment commences in October 2012, but warned that left uncertain, resolution could fall to case law.

A Regulator spokesman said: ‘[If an employer made a mistake] we would be sympathetic. If it is unclear if an individual needs to be autoenroled, and an employer hasn’t done that, we’d advise them to seek advice.’