National recruitment agency Workchain has been ordered to pay £280,000 for plotting to illegally opt workers out of their pension scheme.

In a judgement handed down by Judge Nirmal Shant QC today, 26 October, Workchain (formerly known as Smart Recruitment) owners Phil Tong and Adam Hinkley were handed a four-month prison sentences and ordered to complete 200 hours of community service.

It is the largest fine and first custodial sentence for a case brought by The Pensions Regulator.

Judge Shant told the five defendants their “co-ordinated effort” had been an attempt to “steal a march” on their competitors.

TPR director of automatic enrolment, said: “The scale of the punishments handed down today shows the court agreed with us that these were very serious offences.

“Automatic enrolment has led to almost 10 million more people saving towards their retirement. Its success cannot be allowed to be undermined by such incredibly rare cases of unacceptable behaviour as that of Workchain.”

Tong and Hinkley encouraged five employees at the company to get the temporary workers out of the scheme so the company could avoid making pension payments on their behalf.

Financial controller Hannah Armson, HR and compliance officer Lisa Neal and branch managers Martin West, Robert Tomlinson and Andrew Thorpe then worked together to opt workers out of the Nest pension scheme using its online system.

Judge Shant ordered Workchain to pay a £200,000 fine and costs of £60,930.

Armson was also handed a two-month suspended prison sentence, a five-month overnight curfew and was ordered to pay £1,500 in costs.

West, Tomlinson and Thorpe were also given a two year community order, ordered to do 150 hours of community service and pay costs of £500 each.

A joint investigation into Workchain involving The Pensions Regulator, the Employment Agency Standards Inspectorate, Derbyshire Constabulary and Nottinghamshire Constabulary was launched after Nest reported its concerns about Workchain to TPR in May 2014.

“Nest’s vigilance, our thorough investigation and the sentences from the court have led to a clear message - employers cannot opt a worker out of a pension scheme, even if the worker agrees. Those who try to avoid their pension responsibilities in this way face receiving heavy fines and criminal records,” Ryder added.

In June, the employees pleaded guilty to illegally opting temporary staff out of their workplace pension scheme.

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