Understanding Postponement Rules

What is postponement? 

Automatic enrolment rules means that all eligible workers must be enrolled into a workplace pension scheme.  For companies with seasonal or temporary workforces though, setting up a new pension and enrolling staff can be challenging. 

‘Postponement rules’ mean employers can choose to delay enrolment into a pension scheme for up to three months.  Postponement rules can be used: 

• For staff who start work on a probationary period 
• When there is a large seasonal/temporary workforce 
• When a company has a high turnover of staff and where employees may not work for the employer for more than three months 

An employer can use postponement for any business reason they choose, without checking whether the worker is eligible for automatic enrolment, before issuing the postponement notice. 

Different postponement periods can give an employer time to assess which of their employees are eligible for automatic enrolment, rather than assessing them immediately. 

Postponement can also allow an employer to align their duties with existing business processes, such as ensuring all instances of automatic enrolment correlate with the start of a pay reference period, or it can be used to avoid calculating pension contributions on part month earnings. 

Under current postponement rules, an employer can postpone automatic enrolment into a workplace pension for three months from: 

• The duties start date
• An employee’s first day, or
• The date at which an employee first meets the age and/or earnings criteria to be enrolled into a workplace pension scheme 

Employers can also only use postponement within six weeks of the date that the employee met the criteria to be enrolled into a workplace pension scheme. 

How to postpone an employee correctly

To use postponement, an employer must write a ‘postponement notice’ to every employee individually, telling them that they have delayed working out how automatic enrolment applies to them.  The letter doesn’t have to include a reason but does need to inform the employee, they have the right to opt-in before the deferral date. This must be done within six weeks from the date at which postponement starts.  

On the last day of the postponement period, the employer will need to assess whether any employees who have been postponed need to be enrolled. If so, they must be put into a Workplace Pension immediately and cannot apply for a further period of postponement, even if they postponed for less than the three months allowed.