Gig economy employers should comply with AE ‘voluntarily and promptly’ – TPR

The Pensions Regulator (TPR) has encouraged employers in the gig economy to recognise and comply with their auto-enrolment (AE) duties “voluntarily and promptly”.

Responding to a letter from the Work and Pensions Committee (WPC), TPR chief executive, Charles Counsell, noted that the regulator wanted to see eligible workers in the gig economy receive the pensions they are entitled to.

He confirmed that TPR is working on a number of individual cases across the delivery and transport sectors, with an estimated 150,000 – 200,000 workers affected.

“It is only right that workers contributing to the economy have the opportunity to save for retirement,” he stated.

Counsell added that the regulator will take enforcement action where appropriate to ensure that savers are protected.

However, he conceded that TPR faces “considerable legal complexities” and routine challenges from employers when intervening.

“We work hard to overcome these hurdles as part of our role to protect savers,” he added.

Counsell wrote that the regulator does not consider that the legal position of gig economy workers was clear and, while TPR welcomed the Supreme Court ruling in the Uber case, the circumstances of an individual’s employment make satisfying the “worker” test under s88 PA08 entirely specific to the facts of each case.

“Significant challenges remain even where we have a ruling from the Employment Tribunal (ET),” he continued.

“For example, we have encountered situations where staff at an employer may have been designated as ‘workers’ by an ET, but that still does not mean the employer will award the same worker status to other members of staff within the organisation who were not subject to the ET case.

“TPR’s approach is to monitor ET decisions on worker status and then consider regulatory intervention where an entity has been found to employ workers.

“We engage with an employer which has been party to the ET decision, and we also consider whether that ET decision applies the same status on those working under the same terms and conditions under different employers.

“To do this, TPR utilises its information gathering powers to check those terms and conditions. The committee will appreciate that this is complex. Employers routinely claim, in direct challenge to our approach, that only the actual litigants of the ET’s decision are affected by the outcome, and/or that the terms and conditions are now different (usually re-cast to emphasise self-employment), or that pension rights were not included in the decision.

“However, we routinely use our enforcement powers where we continue to believe that staff are workers for the purposes of AE, to achieve compliance and we have done so in a number of cases.

“I would add that we continue to monitor if other employers make changes and do the right thing for their staff following an ET decision, which they were not a party to, without the need for enforcement action.”

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