Assessing worker status

Hospital doctors

07 / 8 / 2015 Midnight

All workers will need to be categorised into one of three categories; eligible jobholder, non-eligible jobholder or entitled worker. This is done by assessing their age, worker status and qualifying earnings. The following types of workers do not have to be automatically enrolled; individuals who are leaving employment, those who have cancelled scheme membership in the period before automatic enrolment and those subject to HMRC tax protected status. 

Automatic enrolment exceptions
Worker status 
Qualifying earnings
Bank staff and workers with more than one contract.

Automatic enrolment exceptions

Employees leaving - The automatic enrolment process can be stopped for employees who intend to leave employment and are in their notice period when the employers automatic enrolment duties begin.

Membership cancellation - Previously, eligible jobholders need to be automatically enrolled even if they cancel their pension scheme membership. The new rules give employers the choice over whether they enrol an employee who cancels their membership within the 12 months prior to automatic enrolment. Workers who left a scheme more than 12 months before the automatic enrolment date will have to be enrolled.

HMRC tax protection - Some employees with pension savings above the lifetime allowance (currently £1.25 million, correct as at April 2015), are protected against tax charges known as enhanced and fixed protections. These may be lost if the employee is automatically enrolled. Previously the only way to avoid this was for the employee to opt out within a specified period of time following their enrolment.

The new changes will allow employees to become exempt from automatic enrolment if they provide evidence of having tax protected status. However, the employer will retain the power to automatically enrol workers regardless of tax protected status if it is more cost-effective to do so. To learn more, please see our annual and lifetime allowances web page

Worker status

A contract does not have to be in writing, it can be a verbal contract and the terms of employment can be implied rather than explicitly stated. The usual factors considered when assessing whether an individual is an employee, worker, or genuinely self-employed (and therefore excluded from automatic enrolment) include:

  • control over the manner in which the individual carries out their activities
  • the individual must carry out the work themselves and cannot send a substitute
  • mutuality of obligation for the employer to provide work and the individual to accept that work
  • other factors such as financial independence, payment during holiday or sickness.

A worker is defined as any individual who:

  • works under a contract of employment (an employee) or
  • has a contract to perform work or services personally (i.e. they cannot send a substitute or sub-contract the work) and is not undertaking the work as part of their own business.

For additional guidance please see our assess your workforce table which can be helpful in assessing worker status. In addition the Employment Status Indicator (ESI) tool provided by HMRC can be useful for checking worker status.

Agency workers are covered by the new arrangements and either the agency or the entity where they work has the responsibility of assessing for automatic enrolment. Please note that non-executive directors are classed as office holders and do not fall within the definition of ‘worker’.

Secondment: If a worker is on secondment to another organisation they retain the terms and conditions of their originating employer and the originating employer is responsible for automatically enrolling the worker.

Eligible jobholders are people who:

  • are aged between 22 and state pension age
  • work or ordinarily work in the UK
  • meet the earnings trigger.

Non-eligible jobholders are people who:

  • are aged at least 16 and under 75
  • work or ordinarily work in the UK
  • earn over the lower level of qualifying earnings up to the earnings trigger or
  • earn above earnings trigger and are under 22 or over state pension age.

Entitled workers are people who:

  • are aged at least 16 and under 75
  • work or ordinarily work in the UK
  • earn under the lower level of qualifying earnings.

Qualifying earnings

2015/16 (annual)
effective from 6 April 2015 

Lower level of qualifying earnings   £5,824
Earnings trigger for automatic enrolment  £10,000
Upper level of qualifying earnings  £42,385

There is a two step process in relation to earnings.

Step 1 - assess earnings to determine if the worker meets the criteria for automatic enrolment. Qualifying earnings include all of the following pay elements (gross) for the purpose of determining eligible jobholder status:


  • wages
  • commission
  • bonuses
  • overtime
  • statutory sick pay
  • statutory maternity, paternity and adoption pay

If someone has sufficient qualifying earnings to be an eligible jobholder then you move to step two and assess pensionable pay. Workers earning less than the qualifying earnings when assessed in a pay reference period may be classed as a non-eligible jobholder or an entitled worker and different automatic enrolment duties will apply.

Please note that from the 1 November 2013 employers have the right to use an alternative definition of pay reference period for both assessing jobholder status and determining whether a scheme is a qualifying scheme. For further information please see the government response to the October 2013 consultation.

Step 2 - determine the pension contribution. For those workers auto enrolled into NHSPS this will be based on pensionable pay and for workers auto enrolled into the alternative scheme, this will be based on a band of qualifying earnings.

Once auto-enrolled into NHSPS then scheme rules apply, i.e. overtime would be included in qualifying earnings when assessing eligibility for automatic enrolment but there is no requirement to pay contributions on overtime or other forms of non-pensionable pay within NHSPS rules.

Once auto-enrolled into the alternative scheme pensionable pay is based on the list in step one, but pension contributions are only paid on a band of qualifying earnings above the lower and up to the upper earnings levels.

Bank staff and workers with more than one contract

If the worker has two roles with separate NHS employing organisations (with separate PAYE references) both organisations are legally required to assess the worker under automatic enrolment legislation. 

If the worker holds multiple contracts with the same employer, the employer has a choice in how it manages its automatic enrolment duties. The employer will need to review the contractual arrangements and look at how it currently assesses pensionable earnings from each working arrangement. If the employer already offers access to NHSPS under each arrangement then it may wish to class these arrangements as a ‘single employment relationship’ and aggregate the employee’s pensionable earnings.

Alternatively, the employer may separately assess each role and carry out automatic enrolment duties in relation to each individual working arrangement. If the employer chooses to do separate assessments, then the duties under each working arrangement may differ and this may lead to a different level of pension contributions than is currently offered. It is important to give consideration to how pension contributions are managed now and how they will be managed going forward.

The following examples may help explain this further.

Two part-time jobs with the same employer – single employment relationship
An employee with one part-time job of 25 hours and another part-time job (with the same employer) for 15 hours has a total of 40 contracted hours. Each part-time job allows access to NHSPS membership. NHSPS allows up to whole time equivalent hours (in this case 37.5 hours) to be pensionable.

The employer classes these two jobs as part of a single employment relationship, aggregates the pensionable hours and refunds any pension contributions deducted above 37.5 hours In this scenario a qualifying pension scheme has been provided and pension contributions deducted in accordance with NHSPS scheme rules.  This complies with automatic enrolment rules.

Two part-time jobs with different employers
If these two part-time jobs were with separate NHS employing organisations, each employer can still offer active pension membership within NHSPS scheme rules and the second employer would refund any contributions taken above 37.5 hours. Each employer is therefore separately assessing and meeting its automatic enrolment duties.

Substantive employment (less than whole time hours) and a zero hour’s contract
The employee has a substantive job (less than whole time hours) and also has a zero hours contract (or from time to time undertakes additional work on a voluntary basis), with no mutuality of obligation, for the same employer. The first job is clearly under a contract of employment and the individual will meet the definition of a worker for the fluctuating hours worked under the zero hours contract for the same employer.

The employer should look at how they currently treat pension membership under these employee/worker arrangements. If the employer currently allows hours under the substantive contract as well as hours actually worked under the zero hours/casual arrangement to be classed as pensionable, then the employer already aggregates pensionable hours within NHSPS rules.

If the employer chooses to treat this as a single employment relationship  then, for the purposes of automatic enrolment, the employer would be carrying out one assessment and if appropriate, one automatic enrolment into the NHSPS, with pensionable hours capped at normal whole time hours, in accordance with scheme rules.

Alternatively, however, the employer can keep the two arrangements entirely separate, in which case the employer would assess the automatic enrolment duty under the substantive job and separately assess the hours worked in the zero hours/bank arrangement. If the employee met the criteria for automatic enrolment in the substantive role, he/she would be automatically enrolled into NHSPS If in the same pay reference period the fluctuating hours from the zero hours contract meant that the worker was assessed as a non-eligible jobholder (due to insufficient earnings that particular month) then the individual may end up receiving letters in the same month advising that he/she is an eligible jobholder (substantive post) and a non eligible jobholder (zero hours arrangement).

Sending two letters can lead to confusion for the individual.  The next month the worker would be assessed again and if that month the fluctuating earnings were sufficient to trigger eligible jobholder status, then the individual would be automatically enrolled in relation to the zero hours contract.  
If assessing separately, then the employer would have separate duties to communicate with the employee/worker. This also means that the individual would have separate opt out processes and could not assume that an opt out as an employee also covered an opt out as a worker.

Whole time substantive employment and a zero hour’s contract

The employee has a whole time substantive job and also has a zero hours/bank arrangement with the same employer. In this scenario, the two arrangements can either be aggregated as a ‘single employment relationship’ with the pensionable hours capped at normal whole time hours, within NHSPS rules.

Alternatively, the whole time substantive job is assessed separately to the zero /bank hours and the person is offered active membership of NHSPS for the substantive job and as this has not been treated as a ‘single employment relationship’ and the person has used all of their pensionable hours in the substantive role, then the employer will need to offer active membership of an alternative pension for the fluctuating hours working arrangement.

For a table of further examples please see the NHS Employers Multiple contract examples.

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