- Original Poster
- #1
Good evening all,
Can someone please confirm if my understanding on the below is correct, I have tried to bullet-point for ease of reading.
Background:
Changes w/effect from 6th April 2019:
When is a director regarded as a worker?
A director is only a worker for automatic enrolment purposes if:
However, if there is no written contract of employment, or other evidence of an intention to create an employer/worker relationship between the company and a director or directors, we will not seek to argue that an implied contract of employment exists.
Married couples and civil partners
There are no special rules for directors who are married or in a civil partnership, as the duties are not affected by any family relationships.
If the only people working for the company are a married couple or civil partners and both are directors, they will both be workers if they both have contracts of employment with the company. If only one of them has an employment contract, or neither of them does, then neither of them will be workers and the company will not be an employer.
In the case of a company where one spouse or civil partner is the director and the other holds the office of company secretary (please note this is not the same as simply performing general secretarial work, which would not be exempt), exemption from automatic enrolment will depend on whether contracts of employment are held by each spouse or civil partner.
A number of different circumstances might arise, for example:
Thanks in advance
Dilbert
Can someone please confirm if my understanding on the below is correct, I have tried to bullet-point for ease of reading.
Background:
- Limited company incorporated 1st January 2019
- One Director - (Wife) appointed 1st January 2019
- No contract of employment exists
- Wife runs a retail business and conducts all aspects of this from opening,closing, serving, ordering, bookkeeping etc etc
- Wife has been paid above secondary threshold on a monthly salary basis from 1st Feb 2019, but within her personal allowance limit for 2018/19 tax year, thus incurring no PAYE tax - no previous in year employment applicable.
- PAYE Scheme in operation since 1st February 2019, and submissions sent via RTI as required
- Business not eligible for NI Employment allowance due to sole directorship and no employees
- No dividends declared to date
- No pension scheme in previously in operation as business would be exempt being a sole director run business
Changes w/effect from 6th April 2019:
- Business has performed financially well and is now in a position to take another person into the business to support on a part-time basis
- With effect from 6th April, Husband is appointed on a formal part-time contract who undertakes a hands-on roll at minimum wage, all managed through PAYE
- Husband is appointed on a non-director basis
- Husband is paid above secondary threshold
- Question - Would the Company now be eligible to claim the £3k NI Employer's Allowance as both the director and employee meet the secondary threshold limit through their salary payments?
- Actioned - Auto-enrollment now exists for the husband as a non-director contracted employee and a pension scheme sought (completed), pensions regulator notified but call operator was unable to advise on the wife's status on whether assessment is required or not.
- Question - Would the wife as sole director now have to be enrolled or would she remain outside the scope as having no contract of employment in place? My confusion lies in whether an implied contract of employment exists given what she does for the business and whether the wife/husband scenario affects this.
When is a director regarded as a worker?
A director is only a worker for automatic enrolment purposes if:
- they have a contract of employment with the organisation
- at least one other person (who can be another director) also has a contract of employment with the organisation
However, if there is no written contract of employment, or other evidence of an intention to create an employer/worker relationship between the company and a director or directors, we will not seek to argue that an implied contract of employment exists.
Married couples and civil partners
There are no special rules for directors who are married or in a civil partnership, as the duties are not affected by any family relationships.
If the only people working for the company are a married couple or civil partners and both are directors, they will both be workers if they both have contracts of employment with the company. If only one of them has an employment contract, or neither of them does, then neither of them will be workers and the company will not be an employer.
In the case of a company where one spouse or civil partner is the director and the other holds the office of company secretary (please note this is not the same as simply performing general secretarial work, which would not be exempt), exemption from automatic enrolment will depend on whether contracts of employment are held by each spouse or civil partner.
A number of different circumstances might arise, for example:
- if both are directors and neither has a contract of employment, both will be exempt
- if both are directors and one has a contract of employment but the other does not, both will be exempt
- if one is a director and the other is not, and both have contracts of employment, the one who is a director will be exempt but the one who is not a director will not be exempt (depending on their age and earnings, they may qualify for automatic enrolment and need to be put into a pension)
- if both have contracts of employment, neither is exempt and the company will have duties for both of them, even for a spouse or civil partner who is a director (although the company can choose not to automatically enrol a director * see below
- if one holds the office of company secretary but is not a director, they are only exempt if they do not have a contract of employment (for example, because they only perform the official duties of their office, such as submitting the annual return to Companies House)
- if the company secretary has a contract of employment, they would not be exempt even if the contract only applies to additional work that they do over and above their official responsibilities
Thanks in advance
Dilbert
