A UK bus operator has admitted to deliberately avoiding setting up workplace pension schemes for 36 members of staff, despite them meeting the auto-enrolment criteria. Both the company and its managing director have pleaded guilty to offences of wilfully failing to comply with auto-enrolment legislation.
The maximum penalty for this kind of offence is an unlimited fine when dealt with in the Magistrates’ Court and two years’ imprisonment in the Crown Court. The bus company is yet to be sentenced and it is currently being pursued by The Pensions Regulator for £14,400 in civil fines.
This is the first time criminal damages have been brought against an employer, even though more than 20,000 organisations have previously been fined for failing to properly enrol staff onto a workplace pension.
Even businesses making minimum contributions could be leaving themselves open to future legal action as the courts may take the view that businesses owed a greater duty of care to their employees. Employers should continually review their workplace pension scheme to ensure its suitability and whether it represents good value for money.
From 2018, all employers must provide a workplace pension scheme and employees should be auto-enrolled if they earn more than £10,000 per year and are aged between 22 and the state pension age. The minimum auto-enrolment contribution rates are set to rise in April 2018 to two percent and again in April 2019 to three percent.
Employers should consider making higher rates of pension contributions in order to narrow the gap between minimum contribution levels and what employees need in order to maintain a good standard of living when they retire.
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