Over 40% of businesses have delayed auto-enrolment in the past year
– More businesses expected to postpone as auto-enrolment deadline approaches for SMEs.
Businesses auto-enrolling their staff into pensions are heavily dependent on delaying the start date, 4,590 businesses of the 10,817 that have had to auto-enrol their staff so far have postponed auto-enrolment, according to Hugh James, the Top 100 law firm.
Hugh James said that this trend is likely to become more pronounced as the auto-enrolment deadline for SMEs arrives in the next few months.
Hugh James points out that only businesses with 250 or more employees have reached their deadline for auto-enrolment so far. By [April 1st] SMEs with 50-249 employees have to auto-enrol their workforce, with smaller businesses’ deadlines following shortly after.
Hugh James said that the proportion of businesses relying on delaying auto-enrolment is likely to increase as smaller businesses reach their deadline for auto-enrolment.
Hugh James explains that the rules allow businesses to postpone auto-enrolment for up to three months, and one of the main reasons for delaying auto-enrolment appears to be the lack of preparation.
Louise Price, partner at Hugh James, said: “Auto-enrolment has been on the horizon for years, but it has still managed to catch even large businesses unprepared simply because there is so much to do to be ready.
“We anticipate much heavier reliance on postponement from the SMEs that are about to reach the deadline to start auto-enrolment. These businesses do not tend to have large teams of HR and payroll staff, so preparing for auto-enrolment tends to be taken on by an executive with lots of other responsibilities to juggle.
“A lot of the small businesses we have talked to are unaware of how demanding preparing for auto-enrolment can be. It can eat up valuable management time and there is a lot of administrative work involved.”
Hugh James said that as well as providing extra time to prepare, postponement can also be used by employers to:
– Align auto-enrolment dates with their payroll for administrative simplicity
– Delay auto-enrolling staff until their three month probation period has expired
Louise Price said: “Postponement is a useful tool for businesses to make auto-enrolment easier to manage. A lot of businesses are making use of postpone ent to manage payroll issues and ensure they don’t have to go through the administrative headache of enrolling staff who are only employees for a matter of weeks. However, the biggest reason for businesses to postpone appears to be a general lack of preparation.”
