What is postponement?
You can choose to delay assessing and auto-enrolling employees into your workplace pension for up to three months, as long as you have a valid business reason for doing so. This is called the postponement period.
If you arrange a postponement period, following the steps we’ve outlined on this page, you won’t have to backdate contributions – something you would have to do if you miss your duties start date without a formal postponement.
When you can use postponement
You can use postponement for one employee, a group of them or the entire workforce.
Postponement can begin:
- On your duties start date
- On the first day of employment for a new employee,
- On the day an employee turns 22, or their earnings increase to meet the minimum earnings threshold for auto enrolment.
You don’t need to let The Pensions Regulator, or your pension provider know if you’re using postponement. But you do need to write to the affected employees about this to let them know within six weeks of the start of the postponement period.
Please be aware, if you postpone auto enrolment for any of your employees, they still have the right to opt into your workplace pension scheme during the postponement period. Your postponement must be no longer than three months.
How postponement works
1 Decide who needs to be postponed
- It could be a single employee, all your staff, or any number in between.
- The examples below will help you get an idea which of your staff might be suitable for postponement.
2 Decide how long to postpone for
Three months is the maximum, but you can postpone assessment for any amount of time up to that limit.
- You don’t have to stick to a single period for everyone.
- The date on which postponement ends is known as your deferral date
3 Let your staff know
You need to write to all affected employees individually, to let them know that auto enrolment has been postponed, along with the date when they’ll now be assessed.
- The communication you use to do this is called a postponement notice.
- Your postponement notice must also tell each employee that they have the right to opt-in before their assessment date.
- You must make sure you send this within six weeks of the original assessment date.
4 Assess your staff at the end of the postponement period
The final step is to make sure that you assess your staff when the postponement period ends.
- All eligible jobholders must be auto enrolled.
- If an employee is eligible you can’t apply a further period of postponement.
When might postponement be used?
Postponement can give you additional flexibility to auto enrol your employees at times that are better aligned to the needs of your business. You might decide to use postponement in any of the following scenarios:
When employing staff on short term contracts
Postponement can be used to avoid auto-enrolling employees who are hired on temporary contracts (if you’re employing them for less than three months).
Example: Steph, aged 23, is hired on a temporary contract
Steph has a temporary contract to work as an assistant manager at a tailor’s shop from July until September. Before tax, Steph earns £1,400 a month – enough to trigger auto enrolment into the workplace pension scheme. Steph’s employer decides to postpone assessing her for auto enrolment until the end of her temporary contract. During this time, Steph can still opt in if she wants to.
Once Steph’s contract ends and she leaves in September, her employer no longer needs to assess her for auto enrolment at the end of the postponement period in October.
When employee earnings fluctuate
If your employees’ earnings fluctuate, making them temporarily eligible for auto enrolment, you might choose to postpone their assessment until their earnings are more reflective of their annual salary.
Example: Lucy, aged 25, has earnings that fluctuate
Lucy is 25 and starting work at a salon on 1 December. She often earns less than the £833 per month needed to trigger auto enrolment into the salon’s workplace pension scheme. However, Lucy works a lot of extra shifts in the run-up to Christmas, meaning that her earnings are higher than usual.
The salon decides to use postponement and sends Lucy a postponement notice. She doesn’t exercise her right to opt into the pension scheme. Lucy is then assessed in the new year, when her earnings are lower and don’t trigger auto enrolment. Lucy is still able to opt into the pension scheme if she would like to.
To align starting auto enrolment with pay periods
If your duties start date falls in the middle of a pay period, you can use postponement to avoid having to calculate and make contributions for part of a pay period.
Example: Ben, aged 36, starts his new job part way through the pay period
Ben’s 36 and he’s just started a new job with a salary of £32,000 per year. He starts his employment on 19 September.
Because he starts his job part way through the month, Ben’s earnings won’t be enough to trigger auto enrolment into his company’s pension scheme – so they decide to use postponement.
The company issues Ben with a postponement notice on 19 September letting him know that he’ll be assessed for auto enrolment on 1 October – the start of the first full month of employment for the company’s pay period. Ben doesn’t exercise his right to opt in, so he’s assessed for auto enrolment at the beginning of the following month, when his full earnings make him eligible to be auto enrolled.
When employees have a probation period
If your employees have to complete a probationary period before they start work on a permanent basis, you can choose to postpone auto enrolment until their probation ends. This is only possible for probationary periods that are no longer than three months.
Example: John, aged 43, starts a new job on a trial period
John starts work at an estate agent on 3 March. Before he’s given a permanent contract of employment, he has to work through a two-month probationary period. John is 43 and earns £30,000 a year, which would be above the minimum earnings threshold to trigger auto enrolment into his company’s pension scheme.
John’s employer decides to postpone auto enrolling him until they know if they’ll employ him on a permanent basis. They issue John with a postponement notice, and he doesn’t exercise his right to opt in.
When John’s probationary period ends in September, his employer decides to offer him a permanent contract. By this point, the postponement period has ended, and John is assessed for auto enrolment. He’s auto enrolled and decides to stay in the pension scheme.
In all cases, the employer needs to assess the employee at the end of the postponement period if they are still working for them, and auto enrol anyone who meets the criteria at that stage.
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