Twenty-five agencies breach auto-enrolment rules

Jo Faragher

Twenty-five UK recruitment firms have breached the pensions auto-enrolment rules, according to a Freedom of Information Act request filed by umbrella firm Parasol.

Parasol’s data reveals that, between 1 October 2012 and 30 April this year, the Pensions Regulator recorded 25 breaches by staffing companies, issuing 16 warning letters. The other nine were dealt with through “informal action in order to educate and enable the employers to comply with their duties”.

Legislation around automatic enrolment into pensions was introduced in October 2012 to encourage more people to save for retirement. Employers have had to enrol workers in a scheme at various staging dates, depending on how many people they employed in April 2012.

Breaches of auto-enrolment legislation could include poor record keeping, a lack of communication and encouraging or coercing workers to opt out of a pension scheme. Fines of up to £50,000 can be imposed for non-compliance.

The Pensions Regulator said it made 13 voluntary visits to recruitment firms to share good practice regarding auto-enrolment, and that no inspection powers were used.

Commenting on the findings, Parasol managing director Derek Kelly said: “These figures should act as a stark reminder to the recruitment industry that it is being watched like a hawk over auto-enrolment. Although no fines have been imposed to date, it’s likely that the regulator’s patience may wear thin as time progresses – and that future breaches could result in financial penalties.”

The regulator was unable to specify exactly how many recruitment firms will reach their staging date during this period, but it has previously estimated that more than 1,000 would do so between April and July 2014.

It has also warned that the sector is likely to face “significant compliance challenges” because of issues around part-time, temporary and seasonal workers.