According to The Pensions Regulator quarterly compliance bulletins there has been a sharp rise in the issue of escalating penalty notices handed out to employers between July and September¹ this year. A record 576 penalty notices were issued to employers failing to comply with auto-enrolment rules, compared with 38 issued between April and June² – a rise of more than 15 times. Employers receiving escalating penalty notices face fines of between £50 and £10,000 per day, depending on their size.

Fixed penalty notices, where employers are fined £400, also increased dramatically. There were 3,728 fixed penalty notices given out between July and September¹, compared to 861 between April and June, an increase of more than four times.

TPR says the increase in penalties is due to a 50 per cent increase in employers reaching their deadline to comply with the new auto-enrolment rules.

Many employers have unsuccesfully contested the fines, and it is worth noting here that as far as HMRC are concerned the following do not amount to a reasonable excuse (whether for failure to file a tax return or failure to complete the declaration of compliance): „

  • you relied on someone else and they let you down „
  • you found the online system too difficult to use „
  • you didn’t get a reminder „
  • you made a mistake „
  • you or a member of staff were ill.

Colin Giffen, Director of Corporate Solutions at Henderson Stone & Co Ltd, comments, “…the majority of firms coming to us are well aware of their auto enrolment obligations and are preparing with plenty of time. But we also see employers coming to us in a panic having received an initial compliance notice. Whilst we do run a Fast-Track Service and have helped a number of employers avoid fines, we cannot stress enough that employers should take action in plenty of time, three to six months in advance, to avoid unnecessary stress and potential fines.”

¹ http://www.thepensionsregulator.gov.uk/docs/automatic-enrolment-use-of-powers-june-2016.pdf

² http://www.thepensionsregulator.gov.uk/docs/automatic-enrolment-use-of-powers-sept-2016.pdf