Workplace auto-enrolment is a legal duty for all UK employers. Whether you have 1 employee or 1,000, you must assess your workforce, enrol eligible workers, contribute to a qualifying pension scheme, and re-enrol every three years.
This guide covers everything employers need to understand and comply with.
Who Counts as an Employer Under Auto-Enrolment?
Every UK employer with at least one employee (not a company director with no employment contract) has auto-enrolment duties. This includes:
- Limited companies with employees
- Sole traders with staff
- Partnerships
- Charities and voluntary organisations
- Overseas companies with UK-based workers
Sole traders with no employees: No auto-enrolment duties.
Single company director with no employment contract: Usually no duties.
Company director on payroll with employment contract: You have duties for any other workers.
Worker Categories
| Category | Earnings | Age | Rights |
|---|---|---|---|
| Eligible jobholder | Over £10,000/year | 22 – State Pension age | Must be auto-enrolled |
| Non-eligible jobholder | £6,240–£10,000, OR under 22 / over SPA | Any | Can opt in — employer must allow and contribute |
| Entitled worker | Under £6,240 | Any | Can join a scheme but employer has no contribution duty |
Assess all workers individually. Part-time workers or seasonal workers may qualify based on their actual pay in a pay reference period.
Minimum Contributions 2026/27
Contributions are based on qualifying earnings — the band of earnings between the lower and upper threshold.
| Threshold | 2026/27 annual amount |
|---|---|
| Lower earnings limit | £6,240/year |
| Upper earnings limit | £50,270/year |
| Earnings trigger | £10,000/year |
Minimum contribution rates:
| Party | Contribution (% of qualifying earnings) |
|---|---|
| Employer | At least 3% |
| Employee | At least 5% (including tax relief) |
| Total | 8% |
Qualifying Earnings Example
Tom earns £28,000/year. His qualifying earnings = £28,000 – £6,240 = £21,760.
- Employer minimum: 3% × £21,760 = £652.80/year
- Employee minimum: 5% × £21,760 = £1,088/year (includes 20% tax relief)
Alternative Certification (Whole Earnings)
Employers can use certification to pay contributions on a different earnings definition (e.g., total pay), as long as the total pension input is at least equivalent to the qualifying earnings calculation. Many employers pay 5% + 3% on all earnings above the lower earnings limit, which simplifies payroll but may exceed the minimums.
The Auto-Enrolment Process (Step by Step)
1. Know Your Staging Date / Duties Start Date
New employers automatically have a duties start date — the date your first employee starts. For new employers from 1 April 2012 onwards, duties apply from day one.
2. Choose a Qualifying Workplace Pension Scheme
Options include:
- NEST (National Employment Savings Trust) — government-backed, must accept any employer, low charges (1.8% contribution charge + 0.3% annual management)
- The People’s Pension — popular master trust
- Smart Pension — employer-facing platform
- Standard Life, Royal London, Aviva — large insurer group schemes
- Existing occupational or contract-based schemes if they meet quality criteria
The scheme must meet TPR’s quality requirements and be registered with HMRC.
3. Assess Your Workforce
Assess all workers in the first pay period after duties start date (and every pay period/assessment date after that). Determine each worker’s category.
4. Auto-Enrol Eligible Workers
Within the first 6 weeks of duties start (or within 6 weeks of each new eligible worker), enrol them in the pension and begin contributions.
5. Write to Each Worker
Inform each worker of their auto-enrolment status, the pension scheme details, and their right to opt out (if auto-enrolled).
6. Opt-Outs
Workers have a one-month opt-out window after being auto-enrolled. If they opt out:
- Any contributions made in the opt-out period must be refunded
- They must be re-enrolled at the next re-enrolment date (3 years)
- Employers cannot incentivise or pressure workers to opt out (illegal)
7. Declare Compliance
Submit a Declaration of Compliance to TPR within 5 months of your duties start date. Update after each re-enrolment.
Postponement
Employers can postpone auto-enrolment for up to 3 months for:
- A new worker on their start date
- An existing worker who becomes eligible for the first time
- All workers at the duties start date
During postponement, the worker is not yet enrolled but must be assessed at the end of the postponement period. If they opt in during postponement, the employer must enrol them and contribute from that point.
Re-Enrolment Every 3 Years
Every 3 years (on the third anniversary of the duties start date, or a chosen re-enrolment date within a 6-month window), employers must:
- Re-enrol all eligible workers who opted out or left the pension
- Write to those re-enrolled informing them of their right to opt out again
- Submit a re-declaration to TPR within 5 months
Workers CAN opt out again. But they must be re-enrolled again in another 3 years.
Salary Exchange (Salary Sacrifice) for Pension Contributions
Many employers use salary exchange (salary sacrifice) to run auto-enrolment contributions more efficiently. The employee agrees to reduce salary in exchange for employer pension contributions. Result:
- Employee saves employee NIC (13.25% basic rate on earnings up to £50,270)
- Employer saves employer NIC (15% in 2026/27)
- Pension still receives the same total contribution
For a worker on £28,000: Salary sacrifice pension contributions of £1,088/year saves:
- Employee: ~£144/year NIC
- Employer: ~£163/year NIC
Salary sacrifice requires a contractual change and transparency. It must not reduce worker’s pay below National Minimum Wage. It must be agreed in writing.
Common Auto-Enrolment Mistakes
| Mistake | Risk |
|---|---|
| Not enrolling workers in qualifying scheme within 6 weeks | TPR penalty notice |
| Not re-enrolling opted-out workers every 3 years | Compliance breach |
| Paying contributions on wrong earnings basis | Underpayment — must backdate |
| Pressuring workers to opt out | Criminal offence under Pensions Act 2008 |
| Not writing to workers to confirm enrolment | TPR enforcement action |
| Failing to complete Declaration of Compliance | Fine |
What About Directors?
Company directors are an exception. A sole director with no other employees and no employment contract has no auto-enrolment duties (even for themselves). Where there are two or more directors and neither has an employment contract, they are not workers for auto-enrolment.
Directors who DO have employment contracts, or who work alongside non-director employees, should seek specific guidance from TPR or a payroll professional.