Upstream - The Newsletter of Incentive FM Group

HR Update

Laura PhillipsOn Monday 1 October 2012 a number of key pieces of legislation were introduced that have an impact upon employers;

- Changes to minimum wage rates
- Pensions auto enrolment

Minimum Wage

The new minimum wage hourly rates are now £6.19 for those over 21, £4.98 for age 18 to 20 and £3.68 for those aged 16 to 1. There is also, an increase to £2.65 for apprentices under 19 or in their first year of apprenticeship. The Increase in London Living Wage will be announced in November.

Auto Enrolment

The Pensions Act 2008 comes into force requiring employers to automatically enrol qualifying workers into a pension scheme, without any action by the employee and with compulsory contributions from both parties.

As part of the campaign to raise awareness, the DWP engaged stars from Dragons’ Den and The Apprentice to feature in a national TV advertising campaign which was launched on 17 September. It is then down to the employers to build on such publicity and ensure they deliver the massage clearly and concisely to all employees.

This is the first time that employers have been required by law to contribute to their workers’ pensions, so heralding a fundamental change in practise.

The date from which the employer is required to comply with the new legislation depends on the number of employees, with the largest employers having a ‘staging date’ of 1 October 2012. Under the Incentive Group we have ‘staging dates’ of:

- Incentive QAS Ltd November 2013
- Incentive FM Ltd January 2014
- Incentive Lynx Ltd January 2014

Those employees eligible for automatic enrolment are:

Those not already in a pension at work

- Aged 22 or over
- But under State Pension age
- Earn more than £8105.00 per annum in 2012
- Work in the UK

Employees between age 16 and 21 or over state pension age but under 75 can ask to be enrolled and the same employer contribution will be required.
The level of contribution will be phased in rising from 2% initially to 5% in October 2014 and 8% a year later, of which the employer is required to contribute 1% initially, rising to 3%, then 5%.

Individuals can choose to opt out of the pension scheme if they wish to, but they will be automatically enrolled back at regular intervals and will have to elect to opt out again if they do not wish deductions to be made automatically from their salary.

We are beginning our programme to communicate the changes to all our employees explaining what enrolling into a workplace pension means for them, starting with a piece in our Internal Incentive FM Group Newsletter; InForMative.

In addition to the direct costs, the complexity of the rules has warranted substantial investment in an integrated software solution; to not only comply with the new pension legislation but also to ensure we meet the new reporting requirements of PAYE under RTI (Real Time Information).

By Laura Phillips