When an employer’s staging date arrives, it must assess its employees1for auto-enrolment. An employee must be:
- within the auto-enrolment age range;
- earning a minimum amount; and
- working or ordinarily working in the UK2.
It most cases it is quite clear to an employer whether their employee works in the UK, but, particularly in the case of multinational groups of companies, which have employees who are constantly moving globally between employers and locations, it can be difficult to assess for auto-enrolment purposes who is working or ordinarily working in the UK. The most important factor is where the employee is based.
Overseas or UK employer?
It does not matter. Auto-enrolment duties apply equally to an overseas and a UK employer (this usually means a UK registered company). Therefore an overseas employer will need advice on its auto-enrolment duties.
Overseas or UK national employee?
It does not matter. Auto-enrolment duties apply equally to a non UK national as well as to a UK national, as long as the employee is working or ordinarily working legally in the UK.
Seafarer or Offshore Worker?
An offshore worker in UK territorial waters or in connection with the exploration of the sea bed or subsoil, or the exploitation of their natural resources, in the UK sector of the continental shelf, (including the UK sector of a cross-boundary petroleum field), is considered to be ordinarily working in the UK. A seafarer is a person who works in any capacity on a ship or hovercraft. A seafarer who works solely in UK territorial waters is considered to be working in the UK5.
A seafarer is a person who works in any capacity on a ship or hovercraft. A seafarer who works solely in UK territorial waters is considered to be working in the UK. A seafarer who works outside UK territorial waters maybe considered to be ordinarily working in the UK, depending on where the seafarer is based.
Working in the UK
An employee whose contract of employment bases him in the UK is working in the UK.
Occasional business trips outside the UK do not count.
An employee who has been sent or seconded to the UK by another employer is not working in the UK (see the secondment section below).
Ordinarily working in the UK
An employee who is not working in the UK may be ordinarily working in the UK.
It is more difficult to assess if an employee is ordinarily working in the UK, although the test is still where the employee is based.
Assess this by checking the contract of employment, what does it say and how does it operate in practice? If it states that the place of work is in the UK (or if in practice the place of work is in the UK) then the employee isordinarily working in the UK - except in certain circumstances of secondment (see below).
Additional factors to consider are:
- where the employee begins and ends his work each day
- where the employee’s private residence is (or intended to be)
- where the employer’s headquarters is located
- whether the employee pays National Insurance contributions in the UK
- what currency the employee is paid in
Secondment into the UK
If the original employer is outside the UK, and the contract remains with the original employer, and there is also an expectation that the employee will return at the end of secondment, then the employee will not beordinarily working in the UK.
Secondment outside the UK
If the contract remains with the UK employer, and there is also an expectation of return at the end of secondment, then the employee will be ordinarily working in the UK.
The secondment principles above still apply if secondment continues after its original end date, either by extension, or by secondment elsewhere.
An employee may be a “cross-border” employee, meaning that his place of work is sufficiently located in another EEA state that his contract is subject to social and labour law of that other EEA state. An employee may therefore have dual status – being both a “cross-border” employee and ordinarily working in the UK for auto-enrolment purposes. In order to accept a cross-border employee as a member, a UK pension scheme would have to comply with complex and costly regulatory requirements6, including obtaining authorisation and approval from the UK Pensions Regulator. However regulations7 provide that an employer that uses an occupational pension scheme to meet its auto-enrolment duties does not have to auto-enrol a cross-border employee who would otherwise be eligible under the Pensions Act. Note that the exemption does not apply if the employer uses a personal pension to fulfil its auto-enrolment duties.
Working or ordinarily working in the UK
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