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Auto-enrolment confusion over international employees

Employers with international workforces need to be mindful of ‘urban facts’ springing up around UK pensions auto enrolment – or risk fines of non-compliance. 

One area in which we are receiving regular questions from our International NGO (INGO) clients is in relation to auto enrolment, and more specifically, how that relates to international employees. Though seemingly simple on the surface, there are many areas of confusion.

There are a number of misconceptions when it comes to auto enrolment for employers with international workforces including those who:

  • are not on UK payroll
  • are overseas
  • are not employees

A further ‘urban fact’ is that you can just use an existing pension scheme. Many providers are unable to accept those working overseas – and some will be unwilling to even accept those auto-enrolled in the UK.

Whether an individual falls within the scope of auto enrolment is very much dependent on the specific circumstances, but it is possible that the following may need to be included: 

  • Employee seconded overseas, paid, payrolled and taxed locally.
  • Foreign national who performs most of their work outside the UK.
  • Contractor working overseas.
  • Individuals hired via an agency.

The rules (such as they are) may not be straightforward and will be developed in time. Ignorance is unlikely to be a valid excuse, though, and a well thought-out and reasoned process for assessing who is to be included is essential.

Many employers are leaving this very late – if indeed they do so at all. As well as there being significant fines for non-compliance, it is possible that employers will need to put the individual into the position they would have been – not easy for those based overseas who may not even be employees.

We have worked with a number of UK organisations facing these issues and are aware that preparation and planning is essential. 

This post first appeared in INGO News, Autumn 2013 [ 1967 kb ] covering employment issues, regulatory requirements and more for International NGOs (INGOs).