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The first prosecution for failure to provide a workplace pension scheme

Napthens - September 28th 2017

Since 2012, there has been an obligation on a continuously increasing number of employers to automatically enrol eligible workers into a qualifying pension scheme in accordance with the (Pensions Act 2008). These obligations have been phased in according to the employer’s “staging date” and, by February 2018; all employers will be required to comply, irrespective of the number of their employees.

In a new turn of events, The Pensions Regulator (TPR) is now bringing the first prosecution under the relevant provisions of the Pensions Act over allegations that a bus company, Stotts Tours Oldham, and its Managing Director, Alan Stott, deliberately avoided complying with their obligations to enrol the entire eligible workforce of 36 into a workplace pension scheme, specifically under section 45 of the Pensions Act.

In addition, Alan Stott, is accused of “consenting or conniving” in the offence or allowing the offence to be committed by neglect under section 46 of the Pensions Act. The case will be heard at Brighton Magistrates’ Court on 4 October 2017. In total they face eight charges of willfully failing to comply with their duties under the PA 2008.

The maximum penalty that a Magistrates’ court can award for non compliance is an unlimited fine. Given this is the first case of its kind it is unclear what sort of penalty may be imposed should Stotts and Mr Stott be found guilty of committing some or all of the offences alleges. If the case were to be heard in a crown court, the maximum sentence that can be applied is up to two years’ imprisonment.

The latest figures suggest that Stotts are not alone. As of June 2017 there were over 19,000 fixed penalty notices and 3899 escalating penalty notices issued to employers who had failed to comply with their obligations under the Pensions Act. TPR has also begun carrying out spots checks on random employers to ensure that they are fully compliant with their obligations. The latest report highlights the hospitality sector as an area of high risk, suggesting that it could be an area of focus in the near future.

Within this past year the number of penalty notices has drastically shot up; in the last quarter alone 1,384 escalating penalty notices were issued, with companies now also being fined for failing to provide information requested by TPR.

It is now vital that you ensure that you are complying with your requirements under the Pensions Act. TPR has issued some helpful advice which you can use to check your duties as an employer, to ensure compliance or when you will be required to comply by. This can be found here.

Should you require any assistance with managing your requirements under the Pensions Act then please don’t hesitate to contact a member of the team.