One of the most common questions I am asked in relation to Auto enrolment is “Will I have to issue new employment contracts?”
If your existing contracts do not contain a pension scheme or pension clause you do not have to issue new contracts .
Auto enrolment is a derivative or consequence of The Pensions Act It should be remembered that legislation always overrides contract. It should also be remembered that an Employment Contract or Terms and Conditions of Employment do not have to be contained within one document.
It is perfectly acceptable to provide your staff with a letter about auto-enrolment and the deductions which the staff member will experience as a result of this process. This is not dissimilar to informing a staff member by way of letter that they their annual pay has increased rather than sending the staff member a brand new contract.
Employers should seek to make reference to auto enrolment in any new contracts that are issued to new or existing staff. The purpose of this is for the employer to show that they comply with the legislation. However, the reference to auto-enrolment should not be overly complicated or too specific.
If the original contract does contain a pension clause it is wise to revisit the contract and to issue new contracts if the original clause is not compliant. If the existing pension benefits are not compliant with auto enrolment the legislation will override the contract and the existing contract will be out of date.
You should be checking the contract to ensure that the pension and other workplace benefits are not discriminatory. In recent news Lloyds Bank have been in the spotlight and suggestions of gender discrimination surrounding their pension scheme have been made.
It is also a good idea to check that your pension scheme is inclusive. Note that Agency workers are also entitled to be automatically enrolled onto an approved pension scheme even though your original pension scheme might not have allowed this.
Some existing pension schemes require a qualifying period of employment before the employee can partake in the pension scheme. This is not the case with auto enrolment. Auto enrolment entitlements start from day one of employment although it can be delayed for a maximum of 3 months.
Finally it is best practice to review employment contracts, employee handbooks and workplace policies every two years to ensure they are still relevant and compliant.
If you would like to more specific advice on what should an Employment Contract or company policy should include fill in the contact form at www.orchardemploymentlaw.co.uk or call 01634 564136.