! Pensions!Auto+Enrolment! FCSA!Guidance!on!Inducement!&!Prohibited!Recruitment!Conduct!for!Recruitment! Agencies! * About&Pension&Auto,enrolment& & From*October*2012,*all*UK*companies*will*gradually*be*required*by*law*to*include*all*of*their* workers*within*a*UK*pension*scheme.*FCSA*members*Parasol*and*Giant,*the*UK’s*two*largest* Professional* Employment* Organisations,* will* start* pension* autoHenrolment* from* 1* April* 2013,*with*other*FCSA*members*becoming*included*within*the*new*legislation*by*September* 2013.* * Auto*enrolment*has*given*rise*to*numerous*technical*issues*from*an*employer*perspective.* In* this* document* however,* we* will* focus* purely* on inducement and prohibited conduct because we believe these are the key technical issues for FCSA members. * * The*rules*of*pension*autoHenrolment*state*that*unless*the*worker*actively*decides*to*opt*out* of*the*pension*scheme*then*pension*contributions*are*required*to*be*made*by*the*worker* and* also* the* company* providing* the* worker.* Potentially,* this* could* lead* to* prohibited* recruitment*conduct*should*workers*and*jobholders*feel*induced*to*opt*out*of*the*pension* scheme*in*return*for*a*better*wage*and/or*more*hours.* * Inducement&and&prohibited&conduct& ! To*mitigate*against*the*inadvertent*use*of* inducements*or*prohibited*recruitment*conduct* and* to* ensure* compliance,* FCSA* has* devised* a* strict* set* of* criteria* which* all* members* will* adhere*to.*This*set*of*criteria*is*detailed*below.* * FCSA&Approach& * The* legislation* includes* legal* safeguards* to* protect* workers* and* jobholders* from* being* induced* to* opt* out* of* their* ability* to* participate* in* a* workplace* pension* scheme,* or* from* being*discriminated*against*during*the*recruitment*process.*** * FCSA* members,* as* the* employer* or* payer* of* the* workers* (in* the* case* of* those* individuals* paid* but* not* employed* by* FCSA* members)* are* ultimately* responsible* for* meeting* the* requirements*of*the*legislation.*** * In*the*event*that*a*worker*is*either*induced*to*opt*out*of*the*pension*scheme,*be*it*by*the* FCSA* member* or* by* the* agency* directly* (say* through* the* promise* of* more* work),* or* not* offered*employment*due*to*their*choice*to*remain*within*the*pension*scheme,*it*will*be*the* FCSA*member*that*will*have*the*legal*liability*not*the*agency*or*end*client.* * FCSA* members* may* find* themselves* in* a* difficult* position* as* the* agency* may* have* already* discussed*the*potential*for*the*worker*to*opt*out*before*the*worker*has*had*a*conversation* with*the*FCSA*member*or*even*employed*the*worker.**The*FCSA*member,*regardless*of*the* conversations*that*have*taken*place,*still*has*a*requirement*to*include*the*worker*(subject* to*meeting*certain*criteria)*within*their*company*pension*scheme.**It*is*then*for*the*worker* to*freely*decide*if*they*remain*within*the*scheme*or*opt*out.* * Copyright*FCSA*2012*
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For*Guidance*Only*
The*FCSA*member*cannot*do*anything*to*encourage*the*worker*to*opt*out*nor*can*they*deny* employment,*as*doing*so*will*be*a*breach*of*the*legislation*as*well*as*a*breach*of*the*FCSA* Code.* * In* order* for* an* FCSA* member* to* decide* if* there* will* be* a* breach* of* the* legislation,* they*should*ask*themselves*the*following*questions:** * “Is* the* sole* or* main* purpose* of* the* proposed* action* designed* to* persuade* or* cause* an* individual*to*opt*out*of*the*pension*scheme?”*or* * “Am* I* asking* any* question* or* making* any* statement* during* the* recruitment* process* that* indicates*that*an*application*for*employment*will*be*denied?”* * If* the* answer* to* either* of* the* question* is* “yes”* the* FCSA* member* should* cease* the* action* immediately.**If*the*position*is*unclear*then*the*FCSA*member*should*seek*professional*legal* advice* and* document* both* the* question* and* the* legal* response.* * If* the* action* is* implemented,*the*response*should*be*made*available*for*review*by*the*FCSA’s*auditors.* * There*can*be*no*argument*that*the*FCSA*member*has*induced*a*worker*to*opt*out*when*the* FCSA*member*is*not*financially*benefitting*from*any*such*opt*out.* * FCSA*members*are*free*to*enter*into*commercial*agreements*with*business*partners.**The* terms*of*these*agreements*will*have*no*bearing*on*the*FCSA*member’s*requirement*to*offer* their*workers*or*job*holders*membership*of*a*pension*scheme*and*the*requirement*that*no* inducement*can*be*offered*to*encourage*the*worker*to*opt*out*of*a*pension*scheme.** ******* Detailed* below* is* what* can* and* cannot* be* said* to* an* employee* during* the* recruitment* process*and*once*employment*has*commenced.* * Prior!to!recruitment! * • If* a* prospective* employee* asks* about* your* pension* position,* then* you* should* provide* the* information* needed* to* address* the* employee's* issue/interest.* * This* discussion*must*have*no*impact*on*your*decision*to*employ.* • You*are*unable*to*ask*if*the*individual*is*a*member*of*a*pension*scheme;* • You* are* unable* to* ask* if* the* person* would* opt* out* or* remain* within* a* pension* scheme*should*they*be*offered*employment;* • You*can*not*offer*the*individual*a*different*rate*due*to*being*in*a*pension*scheme;* • You*can*not*offer*any*inducement*for*the*person*to*opt*out*of*the*pension*scheme;* • Your*decision*to*hire*an*individual*should*have*no*impact*on*their*pension*status;* • In*short*during*the*recruitment*process*you*should*explain*that*you*have*a*pension* scheme*in*place*and*provide*details*if*requested.* * * * * * * * * * *
Copyright*FCSA*2012*
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For*Guidance*Only*
Once!employed! * • You*are*unable*to*force*an*individual*to*opt*out*of*the*pension*scheme;* • You*are*unable*to*opt*out*on*their*behalf;* • You*are*unable*to*offer*them*more*or*less*work*based*on*their*pension*status;* • You*must*provide*them*with*details*of*your*pension*scheme*and*how*they*can*opt* out;* • If* you* have* decided* to* use* the* 12* week* deferment* period* you* must* tell* your* employee*of*this*and*allow*them*to*contribute*during*this*period,*if*they*choose*to;* and* • If*an*employee*has*opted*out*of*the*pension*scheme*you*must*allow*them*to*opt*in* again*at*least*once*in*a*12*month*period.* * How&will&contributions&be&funded?& ! There*are*various*schools*of*thought*on*how*any*contribution*should*be*funded.**From*an* FCSA*viewpoint,*the*FCSA*member*is*the*employer*and,*as*such,*is*wholly*responsible*for*the* employer* contribution.* * How* the* FCSA* member* funds* the* contribution* is* down* to* them.** However,*if*no*new*money*is*being*added*to*the*supply*chain*then*it*is*selfHevident*that*the* funds* will* need* to* come* from* the* sums* currently* being* received* from* the* agency* or* end* client.**Over*time,*as*pensions*become*more*established;*it*is*likely*that*additional*funds*will* be*added*to*the*supply*chain.**We*have*seen*this*with*WTR*payments*in*respect*of*holiday* entitlement.***** ! Refund&of&contributions& * • If* an* employee* validly* opts* out* of* the* pension* scheme,* the* pension* scheme* should* refund* the* employee* contributions* (made* from* net* pay).* * The* pension* scheme*should*also*refund*the*employer*contributions,*which*in*turn*can*be*paid* to*the*employee*as*a*bonus*or*commission.* * • If* an* employee* leaves* the* scheme* (i.e.* outside* of* a* valid* opt* out* period)* any* contributions*made*(both*employer*&*employee)*will*remain*within*the*pension* scheme.* ! Conclusion& * FCSA* has* updated* their* industry* leading,* Best* Practice* H* Code* of* Conduct* for* Pensions* Act* compliance* guidance.* This* latest* update* ensures* that* FCSA* prospective* and* existing* members* are* working* towards* the* very* highest* standards* of* industry* compliance.* This* is* further*strengthened*by*the*transparent*nature*of*submitting*audit*results*directly*to*HMRC,* a*measure*no*compliant*led*business*should*be*afraid*of.* * * * * * For*more*information*about*FCSA,*please*visit:*www.fcsa.org.uk*
Copyright*FCSA*2012*
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For*Guidance*Only*