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Employers hit with first escalating auto-enrol fines


The Pensions Regulator (TPR) issued almost four times more auto-enrolment non-compliance notices against employers in last three months than in the previous quarter, official figures show.

The watchdog's latest update shows that 469 warnings were handed out over the three months to the end of September, up from 119 the preceding quarter.

TPR also issued two escalating penalty notices in the period, taking the total number dished out to seven.

These fines ranged from £50 to £10,000 per day depending on the size of the company.

The regulator has now used its powers more than 3,000 times, but said the majority of non-compliance had been unintentional.

TPR executive director of auto-enrolment, Charles Counsell, urged employers to allow time to understand how the law applies to them and avoid enforcement action.

He said: "My message to employers is get your plans in place early, meet the deadline to complete a declaration to let us know you have met your duties.

"Don't ignore workplace pensions and risk a fine."

Over the next 12 months, over 500,000 employers will go through auto-enrolment. TPR says that any employers having difficulty completing the online declaration of compliance should contact the regulator as soon as possible to avoid missing their deadline and potentially incurring a fine.

Since 2012, there have been 379 reviews requested by employers who disagreed with a statutory notice issued by TPR. Many of these appeals related to people who - due to a change in circumstance or because they were single person directors - did not employ anyone on their staging date. In these cases the statutory notice is usually revoked.

TPR also published two examples of cases in which employers had unsuccessfully challenged auto-enrolment fines.

Case Study 1

In one case an employer was issued with a £400 penalty for failing to declare compliance by their deadline. The employer challenged the penalty on the grounds that they had not received the preceding compliance notice and said that their post was frequently delivered to the wrong address.

Our review concluded that the employer had received the compliance notice - this conclusion was based on the recording of a telephone conversation between us and the employer, during which the employer acknowledged receipt of the compliance notice. The employer did not agree with the outcome of our review and contacted the First Tier Tribunal to appeal the decision.

The Tribunal considered the appeal and agreed with us that there was no reasonable prospect of the employer's appeal succeeding whether in whole or part, and consequently struck the case out. In addition it was noted that the decision to impose a penalty of £400 was, in the circumstances, entirely reasonable.

The lesson here is, when considering whether to appeal or not, consider the evidence you have to support your claim and the evidence we may hold, as judgement will be based on facts presented.

Case Study 2

In the second case an employer was also issued with a £400 penalty for failing to declare compliance by their deadline. The employer subsequently completed their declaration of compliance, and then requested a review of the penalty. However the request made by the employer was received more than 28 days after the notice was issued. This is outside the timeframe during which a review should be requested, which was clearly stated on the penalty notice itself. We therefore rejected the employer's request for a review of the penalty.

The employer subsequently appealed, following the decision not to carry out a review of the penalty notice, by making an appeal to the First Tier Tribunal.

The Tribunal decided that it did not have jurisdiction to hear an appeal where the application for a review of the notice is made out of time, and where we have decided not to carry out a review on our own initiative.

Consequently this case was dismissed.

The Tribunal went on to consider the grounds of appeal on the hypothetical basis that the Tribunal did have jurisdiction.

The employer's grounds for appeal were that technical difficulties prevented them from completing the online declaration of compliance.

It was determined that even if the employer had experienced difficulties in using the online system, it was open to them to complete the declaration of compliance in other ways such as over the telephone.

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