Landmark penalty brings warning more employers may be caught out
A professional football club has been fined more than £20,000 for repeatedly failing to comply with its workplace pension duties, in what experts warned may be the first of many significant penalties for smaller employers.
Swindon Town Football Club (STFC), which plays in League One, paid a penalty of £22,900 – calculated at a rate of £2,500 per day for the period its compliance was deemed unsatisfactory by the regulator, as well as a lump sum fine.
It failed to auto-enrol eligible workers into a pension scheme in time for its auto-enrolment staging date, neglected to pay employees’ pension contributions and did not write to staff explaining how auto-enrolment affected them.
This marks the first time the The Pensions Regulator (TPR) has issued an ‘escalating’ penalty of such a size to an employer for non-compliance.
Companies that fail to meet auto-enrolment duties face an initial £400 fixed penalty, and the possibility of further escalating fines if they continue to fail to comply. By December last year, more than 1,500 fixed penalties had been issued, along with 31 escalating penalty notices.
Debi O’Donovan, founder of the Reward & Employee Benefits Association, said that although TPR is attempting to work with employers that are struggling with auto-enrolment, more cases are almost certain. “So far, just 4 per cent of employers have staged pensions auto-enrolment, with all of the small SMEs and micro employers still to fall under the rules. You can’t help but expect more to – unwisely – ignore their obligations in the next few years.”
STFC was issued with a compliance notice on 18 August 2014, directing it to auto-enrol staff and pay pension contributions, but it failed to comply by the deadline of 17 October 2014, TPR said. There were then a number of additional delays in the employer complying with its duties, which led to the escalating fine. Although the club is now complying, it must also meet backdated pensions contributions on top of the fine, which it settled in February 2016.
Adrian Kennett, director at Dalriada Trustees, said employers have no excuse not to carry out their workplace pension duties, especially following the sizeable campaign led by TPR outlining the process of auto-enrolment.
If an employer feels they may be struggling to perform their pension duties, Kennett said they should “engage in conversation with TPR; dialogue is better than silence”.
O’Donovan added: “This serves as a wake-up call for employers. The regulator has the legislative power to impose these fines, and it will do so if forced to. Not complying gets very expensive very quickly when you have daily escalation.
“Paying the fine is not the end of the matter: employers still have to set up the scheme, as well as deal with the negative impact of being seen to be a bad employer.”
Story via – http://www.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2016/04/22/football-club-fined-163-2-500-a-day-for-pensions-failings.aspx