Assess a worker for auto-enrolment
Eligible, non-eligible or entitled: the 2026-27 thresholds and minimum contributions.
Every UK employer with at least one member of staff carries a legal duty to put eligible workers into a workplace pension and to pay into it, a duty that has applied to businesses of every size since automatic enrolment completed its roll-out [1]. Private sector workplace pension participation now stands at 16.9 million people, and the figure is still rising even as the earnings thresholds hold steady [2]. A workplace pension is no longer a perk an employer chooses to offer; it is a recurring payroll obligation with its own assessment, its own deadlines and its own penalty regime.
The duty falls on sole directors with a single employee just as it falls on large employers, and the rules are unforgiving of the common shortcut of assuming a small payroll is exempt. There is no size threshold and no opt-out for the employer, only for the worker.
This guide sets out what a workplace pension is, who has to be enrolled and who merely has the right to join, how much must be paid in, how opt-outs and refunds work, why re-enrolment comes round every three years, and what happens when an employer gets it wrong. It is written for employers running payroll, not for pension specialists.
Key takeaways
- Every UK employer must assess staff for a workplace pension every pay period; there is no minimum size.
- Workers split into three categories: eligible jobholders, non-eligible jobholders, and entitled workers.
- The minimum total contribution is 8% of qualifying earnings, of which the employer pays at least 3%.
- A worker can opt out within one calendar month and receive a full refund of their contributions.
- Employers must re-enrol opted-out staff roughly every three years and re-declare compliance to The Pensions Regulator.
What a workplace pension is
A workplace pension is a pension arranged by an employer for its staff, into which both the employer and the worker pay, topped up by tax relief from the government [3]. Automatic enrolment, introduced by the Pensions Act 2008, turned what was once a voluntary benefit into a legal duty, so that eligible workers are placed into a scheme by default rather than having to ask to join [4].
The policy rests on inertia working in the saver's favour. Because enrolment is automatic and opting out takes a deliberate act, participation is high: automatic enrolment has brought more than 10 million workers into pension saving since 2012, and opt-out rates have stayed consistently below 10% [5]. For the employer, the duty is continuous, not a one-off enrolment event.
The regulator and the legal framework
The Pensions Regulator, known as TPR, oversees automatic enrolment and enforces compliance [1]. Its powers flow from the Pensions Act 2008 and later legislation, which set out the duty to enrol, the duty to contribute, and the prohibition on inducing a worker to leave a scheme [4].
Duties apply to any worker who ordinarily works in Great Britain under their contract, regardless of how small the employer is [1]. A business taking on its first employee acquires the full set of duties from that worker's first day, which is why pension assessment belongs inside the payroll process rather than alongside it [3]. The step-by-step mechanics of how a worker is assessed and enrolled are set out in the Moonworkers guide to how auto-enrolment works.
The three categories of worker
The heart of automatic enrolment is assessment. Every pay period, an employer must look at each worker's age and earnings and place them in one of three categories, because the duty owed differs for each [6]. The categories are not fixed labels; a worker can move between them as their age or pay changes.
| Category | Age and earnings | Employer duty |
|---|---|---|
| Eligible jobholder | Aged 22 to State Pension age, earning above £10,000 | Must be enrolled automatically; employer must contribute |
| Non-eligible jobholder | Aged 16 to 74, earning between £6,240 and £10,000, or outside the eligible age band but above £10,000 | May opt in; if they do, employer must contribute |
| Entitled worker | Aged 16 to 74, earning below £6,240 | May ask to join; employer need not contribute |
The earnings trigger for automatic enrolment is £10,000 a year, and the qualifying earnings band runs from £6,240 to £50,270 a year, with all three figures held at the same level for the 2026-27 tax year as the year before [2]. Getting the category right matters because enrolling a worker who should not be enrolled, or missing one who should, both count as compliance failures [6].
Why variable-pay workers are the hard case
Assessment uses actual earnings in each pay period, not an annual estimate, which makes workers on variable hours the most error-prone group [6]. A zero-hours worker can earn above the monthly equivalent of the trigger in a busy month and below it the next, moving in and out of eligible status from one payrun to the next [1].
This is precisely the kind of per-period logic that manual payroll handles badly and that an HMRC-recognised SME payroll platform is built to automate, re-assessing each worker every period rather than carrying forward last month's answer. The monthly earnings trigger equivalent is £833, and the lower qualifying limit is £520 a month, so the bands have to be applied afresh each time [2].
How much must be paid in
The statutory minimum contribution is 8% of qualifying earnings, made up of at least 3% from the employer and the balance from the worker, including the tax relief the government adds [7]. In practice this means an employer paying 3%, a worker paying 5%, and the 5% worker share including basic-rate tax relief.
| Contributor | Minimum rate | Basis |
|---|---|---|
| Employer | 3% | Qualifying earnings |
| Worker (including tax relief) | 5% | Qualifying earnings |
| Total | 8% | Qualifying earnings |
Qualifying earnings are the slice of pay between £6,240 and £50,270 a year, so contributions are not calculated on the whole wage [7]. Earnings below the lower limit and above the upper limit are excluded from the calculation, which keeps the contribution base consistent across employers [2].
Relief at source and net pay arrangements
Tax relief reaches the worker by one of two routes, and the choice affects how the deduction appears on the payslip. Under relief at source, the worker's contribution is taken from net pay and the scheme reclaims basic-rate tax relief from HMRC, adding it to the pot [8]. Under a net pay arrangement, the full worker contribution comes out of gross pay before Income Tax is calculated, giving relief automatically through a lower taxable figure [8].
The distinction matters most for lower-paid workers, because the two methods can produce different outcomes for someone earning below the Personal Allowance [7]. Accountants running pensions across several clients usually standardise the method per scheme, which a multi-client payroll dashboard can enforce consistently.
A worked contribution example
A worker earning £30,000 a year and paid monthly shows how the bands apply in practice. Qualifying earnings are the slice between £6,240 and £50,270, so the annual qualifying figure is £23,760, or £1,980 a month [7]. The employer's 3% minimum contribution is therefore £59.40 a month and the worker's 5% share is £99.00, giving a combined £158.40 paid into the pension each month [2].
A pay rise that lifts a worker above the £10,000 trigger, or a birthday that takes them to 22, can create a brand new contribution obligation part way through the year, which is why assessment runs every pay period rather than once [6]. An employer weighing the full cost of a hire should remember that the 3% pension contribution sits on top of the 15% employer National Insurance, a combination explained in the Moonworkers guide to employer National Insurance.
Choosing a scheme and remitting contributions
An employer must use a qualifying pension scheme, which in most cases is a defined contribution scheme such as a group personal pension or a master trust open to employers of any size [9]. NEST, for example, was created with a public service obligation so that no employer could be turned away, and master trusts such as Smart Pension and The People's Pension are open to employers of any size. A modern payroll engine integrates with these providers so contribution data flows to the scheme automatically [1].
Contributions must be remitted to the provider on time. The statutory deadline is the 22nd day of the month following deduction, although scheme rules can require payment sooner [9]. Late remittance is a reportable breach, so the payment deadline sits alongside the reporting deadline as a compliance date the employer cannot miss [1].
Opting out and refunds
A worker who has been automatically enrolled has a statutory right to opt out, but only within a defined window. The opt-out window is one calendar month, running from the later of the date active membership is created or the date the worker receives their enrolment information [10]. A worker who opts out within that window is treated as never having joined.
Where a valid opt-out notice is received inside the window, the employer must refund the worker's contributions within one month of receiving the notice [10]. The refund is the employer's responsibility and should not wait on the pension provider, because the one-month deadline runs regardless [1].
The ban on inducement
An employer must not do anything to encourage a worker to opt out, and must not make opting out a condition of employment or recruitment [1]. Inducement is a specific offence under the automatic enrolment regime, separate from the duty to enrol, and TPR treats it seriously because it undermines the whole policy [4]. The opt-out notice itself must come from the scheme, not the employer, precisely to keep the decision with the worker [10].
Re-enrolment and the declaration of compliance
Automatic enrolment is cyclical. Roughly every three years an employer must re-enrol workers who previously opted out or left the scheme, if they still meet the eligible jobholder criteria [9]. The re-enrolment date can be chosen within a six-month window around the third anniversary of the employer's duties start date, and postponement cannot be used to delay it [1].
After re-enrolment, the employer must complete a re-declaration of compliance to TPR, just as it did at the start of its duties [9]. The declaration confirms who was assessed, enrolled and re-enrolled, and is due within five calendar months of the relevant date [1]. Missing a re-enrolment cycle is one of the most common failures TPR encounters, because employers treat the first enrolment as the whole job [5].
Postponement at the start
An employer can postpone assessment for up to three months, for example to cover short-term or probationary staff who may leave before they would otherwise be enrolled [9]. A postponement notice must be issued to the worker within six weeks of the postponement start date, and at the end of the period the worker must be assessed and enrolled if still eligible [1]. Postponement is a start-of-duties tool only; it cannot be applied at re-enrolment [9].
What happens when an employer gets it wrong
TPR enforces compliance through an escalating series of steps. It begins with a compliance notice requiring the breach to be put right, followed by a fixed penalty notice of £400 if the notice is ignored [1]. Beyond that, escalating penalty notices accrue daily, from £50 a day for the smallest employers up to £10,000 a day for the largest, for as long as the breach continues [9].
Where an employer has failed to enrol a worker, TPR can require all missed contributions to be backdated to the date the worker first became eligible, including the share the worker would have paid [1]. For an employer that has under-assessed its staff for months, the backdated bill can dwarf the penalty itself, which is why continuous, correct assessment through payroll is the only safe approach [6]. Platforms that embed payroll into their own products rely on an HMRC-recognised payroll API to run this assessment automatically for every worker, every period.
Assess a worker's pension position in seconds
An employer unsure whether a worker crosses the earnings trigger can check the position with the Moonworkers auto-enrolment calculator, which applies the 2026-27 thresholds to any pay figure and returns the worker's category and the minimum contributions due.
Age decides the category: 22 to State Pension age for automatic enrolment, 16 to 74 for opt-in and joining rights. We work out their State Pension age from the statutory timetable.
Assessment result
No assessment yet
Two quick steps: the worker's date of birth, then their pay. The category and minimum contributions appear here.
Auto-enrolment on autopilot
Moonworkers assesses every worker on every payrun, handles enrolment, opt-outs and re-enrolment, and pushes contributions to NEST, Smart Pension and The People's Pension automatically.
Conclusion
A workplace pension is best understood not as a benefit an employer sets up once, but as a payroll process that repeats every pay period and resets every three years. Each payrun carries an assessment, a contribution calculation and a remittance; each triennial cycle carries a re-enrolment and a re-declaration. The duty is continuous, and the penalties for letting it lapse combine a daily fine with a backdated contribution bill.
The structural point for employers is that automatic enrolment was designed to run through payroll, not beside it. Assessment depends on the same earnings figures payroll already calculates, and the thresholds are the same every period until April. The employers who stay compliant are the ones whose payroll assesses every worker automatically and flags the re-enrolment date before it arrives, rather than the ones who treat the pension as a separate administrative task to remember.
Frequently asked questions
Does a small employer have to provide a workplace pension?
Yes. There is no minimum size for automatic enrolment duties, so an employer with a single eligible worker has the same core duties as a large one. The duty is to assess the worker, enrol them if eligible, contribute at the statutory minimum, and declare compliance to The Pensions Regulator. A sole director with no other staff and no employment contract may fall outside the duties, but the moment a business takes on an eligible employee, the duties apply.
How much does an employer have to pay into a workplace pension?
The employer must pay at least 3% of a worker's qualifying earnings, with the total minimum contribution being 8% once the worker's share and tax relief are added. Qualifying earnings are the band between £6,240 and £50,270 a year for the 2026-27 tax year, so contributions are calculated on that slice rather than on the whole wage. An employer can choose to pay more than 3%, in which case the worker's required share falls accordingly.
Can a worker opt out of a workplace pension?
Yes, but the worker must opt out through the pension scheme, not the employer, and within one calendar month of being enrolled. A worker who opts out inside that window is entitled to a full refund of their contributions, which the employer must pay within one month of receiving a valid notice. After the window closes the worker can still stop contributing, but a refund is no longer guaranteed and depends on the scheme's rules.
What is re-enrolment and how often does it happen?
Re-enrolment is the duty to put eligible workers who previously opted out or left the scheme back into it, roughly every three years. The employer chooses a re-enrolment date within a six-month window around the third anniversary of its duties start date, re-enrols the relevant workers, and submits a re-declaration of compliance to The Pensions Regulator. Postponement cannot be used at re-enrolment, and missing the cycle is a common and penalised failure.
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