In her first Guest Blog for Investment Sense, Liz Strama, owner of HR Protected, looks at some of the HR issues Auto Enrolment throws up and which employers might have overlooked.
The process of pension Auto Enrolment is very specific, as an employer you have to follow the rules and make sure everything is in place by your staging deadline. Your pension adviser/provider will help you with putting the pension policy in place, but how do you deal with the internal HR side in your business?
Many employers get so caught up in the process of ensuring the pension policy is ready, they forget about handling the HR.
Here are six HR tips you should know about:
Tip #1: For the process to be viewed positively by employees, it’s vital to have full and open communication from the start. Employees need to know the exact details of how the pension policy will work for them, how much it will cost them, how much the company will contribute, and what they have to do. For employees to be happy with the process, they need to understand it first.
Tip #2: Hold relevant meetings. It may be easier to hold initial group meetings to provide an overview of what will be happening, and then to hold individual meetings with each employee to make sure they fully understand the process. Group meetings are a good way to introduce the pension process initially as everyone will receive the same information at the same time, rather than employees getting second-hand information (which is usually wrong!).
Tip #3: When your company pension changes, you need to change your employees’ Contract of Employment and any other documents (such as Company Handbook) to reflect the changes. You should also have a specific Pension Policy that explains the pension in detail for employees. If you haven’t updated your Contract of Employment and Company Handbook for a while, this is an ideal opportunity to make sure all your company policies are up to date with current employment law. Having current HR documents is vital, not only to ensure you’re up to date with employment law, but also to ensure the documents reflect your company’s specific rules and procedures.
Tip #4: To comply with Auto Enrolment rules, it’s important to make sure your HR/payroll systems are able to cope with the information required. You will need to identify eligible and non-eligible workers, provide correct information, arrange deductions from pay, deal with opt-outs/opt-ins, ensure joining notices are given, keep detailed records, plus other responsibilities. This is not a one-time only process – certain information needs to be provided every time you pay your employees. Therefore a detailed administration process is required to make sure you have the right resources in place to handle all the new responsibilities.
Tip #5: Ensure you have someone in the company who fully understands the pension policy and how it works so they can easily explain the process to employees. Initially it may be easier to ask your pension adviser/provider to come in and explain the process to your employees. It would then be good practice for someone in the company (e.g. HR Manager, Finance Director etc.) to have training so they fully understand the pension policy and how it works. They will then be able to explain it easily to new employees and existing employees who become eligible.
Tip #6: Don’t try to cut corners! It sounds obvious, but don’t try to implement Auto Enrolment by not following the correct process. You may think it will save you time, but in reality it will create more problems and will end up costing you more in lost time and money (via potential fines etc.). As an employer you have responsibilities towards your employees. If you treat your employees fairly, they will want to do their job well and stay loyal to the company. However, if you treat your employees unfairly that’s when they start to resent their job and productivity levels decrease, morale decreases and your employees will ultimately leave.
There’s a lot of scaremongering about Auto Enrolment, but if you follow the process correctly and get the right advice, you can implement it in a positive way that will benefit both the company and your employees. For more help, please contact us for further information by emailing firstname.lastname@example.org or calling us on 01283 240 720.
Note: This article reflects the view of the author. It does not necessarily reflect the view of Investment Sense Limited. The article has been checked and approved to ensure that it is both accurate and not misleading. However, this is a blog and the reader should accept that by its very nature many of the points are subjective and opinions of the author.