5. Eligibility And Exemptions
Who qualifies or is eligible for Auto Enrolment?
Employers will need to assess the workforce to identify which category their employees fall into. There are three categories:
- Eligible Jobholder
- Non-eligible Jobholder
- Entitled Jobholder
These categories are based on age and earnings and the employer will have different duties and obligations for each employee depending upon their classification.
Those that fall into the Eligible Jobholder category (aged between 22 and the State Pension age, earns over £10,000.00 a year and works in the UK) will be automatically enrolled into the workplace pension. They can choose to opt out but if they choose to do nothing, they will be automatically enrolled.
Those that fall into the Non-eligible Jobholder category are either those that:
- Fall outside of the required age bracket i.e. ages between 16-21 or between the State Pension age - 74 and who earns above the auto enrolment earnings trigger of £10,000.00.
- Are aged between 16-74 and earn above £6,136.00 (the lower earnings level for qualifying earnings) but below £10,000.00 the auto enrolment earnings trigger*.
Although the employer is not required to automatically enrol non-eligible jobholders into the pension scheme, these workers have a right to opt in and should they choose to do so, the employer is obliged to make contributions to their pension pot.
Those that are classed as Entitled Jobholders, aged between 16-74 but earns less than the lower earnings level for qualifying earnings, have a right to also join the workplace pension. However, the employer is not obliged to automatically enrol them into the pension scheme nor are they required to make any contributions to the pension pot. Entitled Jobholders who ask to join a pension scheme do not have opt-out rights.
* These figures are for the 2019–2020 tax year.
For more information, please refer to our Employee Classifications & Qualifying Earnings page.
Who is exempt from Auto Enrolment?
A company can be exempt from auto enrolment duties if it is comprised only of directors. In this situation, you are not legally required to operate an auto enrolment workplace pension scheme. The following are reasons why a company may be exempt from auto enrolment duties by reason of Director Exemption:
- There is only one director and there are no other staff working for the company.
- The only people working for the company are directors and none of them have an employment contract.
- The only people working for the company are directors and only one of them has an employment contract.
- The company does not or no longer employs any staff because it has ceased trading/is terminally insolvent e.g. has gone into liquidation/has been dissolved.
For more information on auto enrolment exemptions, head over to our Employer Information page.