Digital Transformation Through Agile Delivery
IT Agility AbilityTM
Digital Transformation Through Agile Delivery
IT Agility AbilityTM

Auto enrolment and what it means for contractors

By . December 20, 2018
People are living longer and for most people, retirement will be taken at a later age. For contractors who move from role to role, pensions can be a whole different ball game compared to permanent employees.

Auto enrolment is a government initiative that has been set up to help employees with pensions.

What is auto-enrolment?

Auto-enrolment will see employees automatically become members of an employer pension scheme. The employee does have the option to opt-out if they choose to, but following the employment by a business, employees will become members of a pension scheme.

Anyone who is a job holder and between the age of 22 and State Pension Age who earn over £8,105 is eligible for auto enrolment, this includes:

  • Permanent employees
  • Part-time employees
  • Temporary employees
  • Contract employees

So what does auto-enrolment mean for contractors?

It could mean different things for a contractor depending on if a contractor operates through a personal service company or contract through an umbrella company. Contractors who operate through a limited company with only one employee is not eligible for auto enrolment.  However, for limited companies that have more than one employee, they will fall into the auto enrolment criteria.

Contractors working through an umbrella company can be involved in auto enrolment by meeting certain criteria. Most contractors will be auto-enrolled through the umbrella when their service provider reaches a ‘staging date’ over the next few years. The umbrella company is essentially just a payroll provider; they will not have the means to pay in the employer’s portion of the contribution, so that will fall on the contractor to make both payments

What does auto enrolment mean for PAYE contractors?

Whether you work under an umbrella company or directly through an agency, they will need to comply with the legislation.

Contractors paid directly by an umbrella company may not have to worry about auto enrolment, depending if the umbrella company has a pension scheme in place and they have optted-in. The umbrella company may choose to amend their scheme rules so that all eligible employees will be automatically enrolled.

For more information on auto enrolment and pensions, visit



Who We Work With