Pensions Auto Enrolment for Restaurants

Any fears that were being bandied about around auto enrolment have been firmly quashed as its success continues to roll on. While there have been the inevitable employers who have failed to fulfil their obligations, the contributions increases introduced back in April were well received and the majority of employers seem to be aware of their duties to staff.

Your Money reports that three quarters of employees are now saving for their retirement and that workplace pension contributions have increased particularly among younger and lower paid workers. This just goes to show that employees are recognising the value of retirement planning and taking advantage of the options available.
 

Changing Faces

While auto enrolment has set rules that apply across all types of industry, we’d like to use this post to address the topic of auto enrolment for restaurants. The hospitality business is notorious for its high turnover which is one of the key reasons that restaurants that have a major challenge when it comes to fulfilling stringent requirements. Temporary staff, shift workers and different pay dates can all confuse matters but how does this translate into employer duties?

Whether you’re an owner of a small restaurant or a chain of hotels, your employees will need to be registered into a workplace pension. Size is irrelevant when it comes to auto enrolment and if you employed any member of staff for the first time on or after 1 October 2017, you will need to provide them with a workplace pension from their very first day of employment. Eligible employees are those aged over 22 who earn more than £10,000 a year and have not yet reached pensionable age. They must also ordinarily work in the UK.

Auto enrolment comes with a hefty amount of admin because the eligibility criteria outlined above must be assessed at every pay cycle to keep up to date with your individual staff members. For example, an employee may have a pay rise that takes them above the £10,000 threshold or they may celebrate their 22nd birthday and become eligible for the workplace pension. Good payroll software and professional advice will help you to stay on track with your duties.
 

A Collective Income

One area which can cause confusion is when your restaurant employees work multiple jobs, from which they collectively earn more than £10,000 a year. Auto enrolment rules state that this £10,000+ per year income must come from a single employer, which means that if you’re paying any part-time or temporary member of staff less than that, then you have no duty to the individual under auto enrolment. 

While Scottish Widows report that almost two million workers are missing out on pension contributions due to this rule, it can also cause miscommunication whereby employees may believe they are entitled to a workplace pension due to their overall earnings and the fact that their multi-job set-up seems them working full-time hours. This is not the case and it’s important for employers to be informed about the fact.
 

The Question of Overtime

It’s a fact of life that many restaurant workers will find themselves working overtime on a frequent or occasional basis. So how does this factor into auto enrolment duties? There are set minimum contributions that both employer and employee must pay which apply to anything earned over £6,032 up to a limit of £46,350 (tax year 2018/2019). 

This figure includes both overtime and bonus payments which is why it’s crucial to keep strict records of the overtime hours worked and any bonuses due to each individual employee to make sure that no-one misses out or pays incorrect contributions.
 

What about Temporary Staff?

Many restaurant employees are seasonal workers or temporary staff. While it might seem as if you would not need to join such individuals up to auto enrolment, this may not be the case. Temporary staff members will make the process more complicated as you will need to consider fluctuating hours and earnings, as well as consider staff who may join or leave in the middle of pay periods. 

Implementing a solid payroll software system will help to calculate contributions and assess every member of staff at each pay cycle, but it’s still important for you to know your duties. The same general rules apply to temp staff as permanent workers, i.e. any staff that are aged between 22 to State Pension Age and earn over £192 a week, or £833 a month, must be put into a pension scheme which you must pay into. And if you employ family members in the restaurant, the same rules apply.
 

Postponement, Joining and Opting In

However, if you know that any employee will be working for you for less than three months, you can choose the “postponement” option. This means you can delay working out who to put into a pension scheme as long as you write to the individual member of staff to explain the process within six weeks from the date after postponement starts. 

If any temporary staff member asks to be put into a pension scheme during the postponement period, they must do so in writing to their employer. Should their age and earnings fulfil the criteria, then you – as an employer – must opt the individual into the scheme within a month of receiving the request.

In the case where a staff member is earning £6,032 or less per year, then the workplace pension scheme that you enrol them into does not need to be the same as the one you use for employees. You are also not required to pay an employer contribution.
 

A Tronc PAYE Scheme and the Impact of Auto Enrolment

There is always the possibility that your restaurant is the exception to the auto enrolment rule. For example, where a restaurant has in place a Tronc PAYE Scheme managed by a Troncmaster and compliant with HMRC guidelines, all earnings paid through this PAYE scheme (tips and gratuities) are not impacted by the auto enrolment legislation. 

As such, the restaurant will not have any auto enrolment duties in respect of the Tronc PAYE Scheme. However, there is a requirement to notify The Pensions Regulator that this is the case so that their records can be amended.