This guide is for financial advisers only. It mustn’t be distributed to, or relied on by, customers. It is based on our understanding of legislation as at May 2023.
Legislation allows an employer to postpone the automatic enrolment of workers at specific dates. For an employer with a staging date, postponement can take place on:
- the employer’s staging date, for workers in employment at that date, or
- the date the worker is first employed by the employer (for workers not employed at the employer’s staging date), or
- the date an existing worker meets the eligible jobholder criteria (e.g. where a worker reaches age 22.)
New employers* can use postponement on:
- the first day of employment for any worker, including the start date of their very first worker (the employer’s duties start date), and
- the date a worker employed by them meets the eligible jobholder criteria on or after the employer’s duties start date.
Postponement cannot be used at the employer’s cyclical automatic re-enrolment date. You can read more about this in the Cyclical Automatic Re-enrolment section of this guide.
Postponement can last for up to three months and is sometimes referred to as a ‘waiting period’ or a ‘deferral period’.
* A new employer is:
- an employer who becomes an employer on or after 2 April 2017 and doesn’t have a PAYE scheme, regardless of whether they pay PAYE income or not, and
- an employer who first pays PAYE income in respect of any worker on or after 1 October 2017
It’s important to note that a jobholder who is not an active member of a qualifying scheme can opt in, and an entitled worker can choose to join a registered pension scheme, at any point during the deferral period.
Where assessment for automatic enrolment is postponed for a worker, the employer doesn’t have to check whether the worker is eligible for automatic enrolment before issuing the postponement notice.
The deferral period can be any period of up to three months from the starting date. The starting date is:
- the first day of employment of any worker, including the start date of the first worker employed, or
- the date a worker meets the eligible jobholder criteria on or after the employer’s duties start date.
If a deferral period is to be operated, the employer must provide the worker with a notice (the ‘postponement notice’) in writing (including email), advising that the automatic enrolment date will be postponed until the date detailed in that notice (the deferral date) and providing other prescribed information.
The postponement notice can be given by the employer on or before the starting date, or within six weeks from the day after the starting date
A new employer’s auto-enrolment duties begin on 1 July 2023. The employer decides to use the maximum deferral period of three months from their duties start date for all workers in their employment, so the deferral date is 1 October 2023. The postponement notice must be given by the employer to these workers by no later than 12 August 2023 (i.e. 6 weeks from the day after their duties start date of 1 July 2023).
In all situations where postponement is used, the employer needs to check the status of the worker at the deferral date, assuming the worker is still employed by the employer. This also includes the situation where a postponement notice is issued when the worker first becomes an eligible jobholder after the employer's duties start date, because at the end of the deferral period the worker may no longer meet the eligible jobholder conditions.
If on the deferral date the worker qualifies as an eligible jobholder in relation to that employment (and they haven’t already opted in), that worker’s automatic enrolment date is the deferral date, and they must be automatically enrolled.
If on the deferral date the worker is not an eligible jobholder in relation to that employment, the employer does not have to automatically enrol them, even where the worker previously met the requirements for automatic enrolment at the start of (or during) the deferral period. Of course, if the worker later meets the automatic enrolment conditions again, the employer will have to automatically enrol them at that time (or give them another postponement notice – see below).
Using postponement more than once for a worker
Where a worker who has been deferred doesn’t meet the eligible jobholder criteria on the deferral date, they don’t have to be auto-enrolled (but there are other employer duties to fulfil). If the same worker meets the eligible jobholder criteria again in a later pay reference period, a further postponement notice can be given.
This further deferral period can also last up to three months and a notice must be issued no later than six weeks from the day after the day on which the worker meets the conditions to be an eligible jobholder.
At the end of the further deferral period, the employer will have to assess the worker, and automatically enrol them if they meet the eligible jobholder conditions.
However, if an employer uses postponement at their duties start date and a worker meets the eligible jobholder criteria during that postponement period, the employer cannot issue a further postponement notice starting on the date the worker became eligible. This prevents overlapping postponement periods and ensures that the maximum deferral period is three months.
For example, an employer postpones a worker on their first day of employment on 1 July for three months – so the deferral date is 1 October. On 1 August, the worker meets the eligible jobholder criteria for the first time. The employer is not allowed to issue a further postponement notice to run from 1 August for three months – instead, they should wait until the deferral date of 1 October and assess the worker at that date. If the worker is eligible, they should be auto-enrolled. If not, the employer should continue to assess them until they do meet the eligible jobholder criteria – at which point, the employer can use postponement again.
Employers might use a deferral period for many reasons:
- they have a high turnover of staff due to the nature of the business
- they have a significant number of workers on short-term contracts
- to ensure all instances of automatic enrolment tie in with the start of a pay reference period (for example, to avoid paying contributions for a part period)
- to ensure workers who usually don’t have sufficient earnings to be an eligible jobholder, but who may have a pay spike (i.e. a one-off bonus), are not automatically enrolled
- to benefit from up to three months where contributions don’t have to be paid (except if a jobholder chooses to opt in)
- to facilitate contractual joining into a salary sacrifice arrangement
- to help new employers manage their auto-enrolment duties at their duties start date, along with all their other responsibilities as a new employer.
Further information about postponement, including what must be included in a notice, can be found in the Pensions Regulator’s guidance on Postponement.