Categories of worker
These FAQs are for financial advisers only. They mustn’t be distributed to, or relied on by, customers. They are based on our understanding of legislation at the date of publication.07 January 2022 Back to results
When working out what their duties are under the automatic enrolment legislation, an employer needs to first identify if they have any workers. Once they’ve done this, they have to work out which category each worker falls into. This will determine exactly what their duties are in respect of that worker.
Identifying a worker’s category isn’t just done when an employer's automatic enrolment duties first apply but at other dates afterwards, for example, on the automatic re-enrolment date or when a worker reaches age 22.
The figures used in these FAQs are relevant for the 2021/22 tax year.
A worker is someone who has entered into, or works under, a contract of employment, or any other contract to do work or perform services personally for the other contracting party. It doesn’t matter whether the contract is express (clearly stated – whether in writing or not) or implied.
Someone who contracts to do work for a customer or client of their business undertaking or profession is specifically excluded (for example, an employer company contracts with a trader to provide certain services or contracts with a professional firm, such as external lawyers, to provide legal advice).
Therefore ‘worker’ covers full-time, part-time, fixed term/temporary and agency workers, where there’s a contract to do work for them (not as part of a business relationship).
With agency workers there are usually three parties involved; the agency, the agency worker and a third party, known as the principal, that the agency supplies the agency workers to work for.
Where there’s no worker’s contract with either the principal or the agency, but there’s a contract or arrangement between the agency and the principal to supply the agency worker, the agency worker is treated as if they have a worker’s contract with the party who is responsible for paying them. If neither the agency nor the principal is responsible for paying, whoever actually pays the worker is treated as having the contract with the agency worker for the purposes of this legislation.
A jobholder is a worker (as defined above):
- who is aged at least 16 and under age 75
- who is working or ordinarily working in the UK under contract, and
- to whom 'qualifying earnings' are payable by their employer in the relevant pay reference period
Over a 12-month pay reference period, qualifying earnings are annual earnings of more than £6,240 but not more than £50,270. So the maximum qualifying earnings figure is £44,030. These figures are for the 2021/22 tax year.
For this purpose, earnings include:
- salary or wages
- overtime payments
- statutory sick pay, statutory maternity pay, ordinary or additional paternity pay and statutory adoption pay.
There are two definitions of pay reference period that can be used for the purposes of jobholder definition and the automatic enrolment trigger. The employer can choose to use:
- a pay reference period that is determined by the period over which the worker is paid their regular wage or salary (provided it’s a period of not less than a week), or
a pay reference period that’s aligned to the relevant tax period and which is equal in length to the period over which the worker is paid their normal regular wages or salary, or one week, whichever is longer (providing their scheme administrator is willing to administer the scheme on this basis).
Please see our 'Pay reference periods' FAQs for more detail.
The term entitled worker describes a worker who would be a jobholder but for the fact that qualifying earnings aren’t payable to them by the employer in the relevant pay reference period (in other words, they’re aged at least 16 and under age 75, working in the UK but earning not more than £6,240).
Jobholders can be further split into eligible jobholders and non-eligible jobholders. The eligibility part relates to whether they are eligible to be automatically enrolled or not.
An eligible jobholder is a worker:
- who is aged at least 22 and under state pension age
- who is working or ordinarily working in the UK under contract, and
- has qualifying earnings (as defined above) in the relevant pay reference period of more than the automatic enrolment trigger of £10,000.
A non-eligible jobholder is a jobholder who doesn’t meet the above definition of an eligible jobholder i.e. a jobholder who is:
- aged at least 16 and under 74 and is working or ordinarily working in the UK, and
- has qualifying earnings at or below the earnings trigger of £10,000 for automatic enrolment
- aged at least 16 and under 22 or state pension age and under 75 and is working or ordinarily working in the UK, and
- has qualifying earnings above the earnings trigger of £10,000 for automatic enrolment.
Below is a table summarising the categories of workers and the main employer duties in relation to them. This table assumes the worker is working or ordinarily working in the UK and is not already active in a relevant scheme.
Automatic enrolment, opting in and joining pension savings
|Age (inclusive) & earnings||16-21||22 - state pension age||State pension age - 74|
|£6,240 or under||Worker entitled to join/become active in registered pension scheme.|
|Over £6,240 and not more than £10,000||Jobholder entitled to opt-in to automatic enrolment scheme, but not entitled to be automatically enrolled.|
|Over £10,000||Jobholder entitled to opt-in to automatic enrolment scheme, but not entitled to be automatically enrolled.||Jobholder eligible for automatic enrolment.||Jobholder entitled to opt-in to automatic enrolment scheme, but not entitled to be automatically enrolled.|
Employers’ obligations can change because a worker can move from one category to another while they’re in the same employment, for example:
- they reach age 22 or state pension age
- their earnings go up or down
- they no longer work in the UK
If a jobholder is employed by more than one employer, or changes employer, the duties apply to each employer separately.
A director isn’t a worker unless they’re employed by the company under a contract of employment, and at least one other person is so employed. In other words, one-man companies aren’t included in the definition of worker.
Further information about workers can be found in the Pensions Regulator’s Detailed Guidance 1 – ‘Employer duties and defining the workforce’.
Where a jobholder also holds office as a director, the employer can choose not to apply the automatic enrolment (and re-enrolment) duties. Holding office as a company director means either a director formerly appointed under the Companies Act 2006 or acting as a director and having a decision-making role in the corporate governance of the company. For corporate bodies other than companies, holding office means anyone holding an office of director created by the establishing legislation or Royal Charter.
If automatic enrolment (and re-enrolment) duties are not applied, the director would retain opt-in and joining rights. Alternatively, if the employer decides that it’s easier to automatically enrol all eligible jobholders regardless of the director status, they can do this too. Employers are free to decide the option that suits them best.
How are Limited Liability Partnerships (LLPs) affected?(Expand content) (Minimise content) (Content loading)
Where a jobholder is a member of an LLP and has qualifying earnings paid to them by that partnership, but they are not treated for income tax purposes as being employed by that partnership, the employer can choose not to apply the automatic enrolment (and re-enrolment) duties. This works in the same way as described for directors above. If the employer chooses not to apply the automatic enrolment (and re-enrolment) duties, the member of the LLP will still retain opt-in or joining rights.
Are there any exceptions to the employer's automatic enrolment duties?(Expand content) (Minimise content) (Content loading)
Yes - in addition to the modified employer duties for directors and partners in an LLP, there are other exceptions to the automatic enrolment duties for employers. The exceptions apply in specific circumstances and mean that the automatic enrolment duties are either changed or do not apply.
You can find out more in paragraphs 83 to 120 of the Pensions Regulator’s Detailed Guidance 1 – ‘Employer duties and defining the workforce’.
|Category of worker||Description|
|Worker||A worker is someone who has entered into, or works under: |
|Jobholder||A worker who: |
|Eligible jobholder||A jobholder who: |
|Non-eligible jobholder||A jobholder who doesn't meet the definition of eligible jobholder, ie a jobholder: |
|Entitled worker||A worker who: |
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