Auto-Enrolment for Agency Workers
Who auto-enrols agency workers? Understand pension responsibilities for employment agencies and hirers.
Last updated: 30 January 2025
Employment agencies have auto-enrolment duties for workers they employ.
Who Is the Employer?
General Rule
| Position | Detail |
|---|---|
| Agency pays worker | Agency is employer |
| Agency's payroll | Agency's duty |
| Not the hirer | Usually |
Determining Employer
| Factor | Indicates Employer |
|---|---|
| Who pays | Through PAYE |
| Contract with | Worker |
| Employment relationship | Where it sits |
Agency Duties
Full Responsibilities
| Duty | Agency Must |
|---|---|
| Assess workers | Their workforce |
| Choose scheme | Have one |
| Enrol eligible | When qualify |
| Contribute | Minimum 3% |
| Communicate | Required letters |
| Declare | To TPR |
Same As Any Employer
| Treatment | Applies |
|---|---|
| Same rules | As direct employers |
| Same thresholds | £10,000 etc |
| Same categories | Eligible, non-eligible |
| Same deadlines | For compliance |
Hirer Position
No Duties Usually
| Hirer | Position |
|---|---|
| Uses agency | Staff |
| Not the employer | Of agency workers |
| No auto-enrolment | Duties for them |
| Agency handles | Everything |
Exception
| If | Position |
|---|---|
| Hirer employs directly | Their duty |
| Mixed arrangements | Check carefully |
| Hybrid setups | May vary |
Assessing Agency Workers
Variable Earnings
| Challenge | Approach |
|---|---|
| Hours vary | Assess each period |
| Earnings fluctuate | Per pay period |
| Some weeks high | Some low |
| Track carefully | Each assessment |
Per Pay Period
| If Earnings | In Period |
|---|---|
| Over threshold | Eligible that period |
| Under threshold | Not eligible that period |
| May change | Week to week |
Example
| Week | Earnings | Assessment |
|---|---|---|
| 1 | £400 | Eligible |
| 2 | £150 | Not eligible |
| 3 | £500 | Eligible |
| 4 | £180 | Not eligible |
When Eligible
Trigger
| Once Eligible | Action |
|---|---|
| Must enrol | Into scheme |
| Stays enrolled | Usually |
| Contributions | Continue |
Ongoing Membership
| Once Enrolled | Position |
|---|---|
| Remain member | Typically |
| Even if earnings | Drop |
| Contributions | On actual earnings |
Multiple Clients
Single Agency
| If Worker | For Multiple Clients |
|---|---|
| Through same agency | Combine earnings |
| Assess on total | Agency pays |
| Single employer | Relationship |
Multiple Agencies
| If Worker | Uses Multiple Agencies |
|---|---|
| Each agency | Separate employer |
| Assess separately | Each agency |
| Multiple enrolments | Possible |
Practical Challenges
Variable Workforce
| Challenge | Solution |
|---|---|
| Workers come and go | System tracking |
| Hours vary | Per-period assessment |
| Many workers | Automated systems |
Administration
| Need | Capability |
|---|---|
| Track earnings | Each period |
| Assess workers | Regularly |
| Process enrolments | When triggered |
| Handle opt-outs | If received |
Umbrella Companies
Where Agency Uses
| Structure | Position |
|---|---|
| Umbrella employs | Worker |
| Umbrella | Is employer |
| Umbrella | Has duties |
| Not agency | In this case |
Complex Structures
| If Unclear | Action |
|---|---|
| Check who pays | Through PAYE |
| Check contracts | Employment relationship |
| Seek advice | If complex |
Communication Challenges
Contact with Workers
| Issue | Agency Must |
|---|---|
| May not see often | Still communicate |
| Multiple locations | Send letters |
| Variable work | Track addresses |
Required Communications
| Letter | When |
|---|---|
| Enrolment | When enrolled |
| Opt-in rights | Non-eligible workers |
| Joining rights | Entitled workers |
| Postponement | If using |
Scheme Considerations
Suitable Schemes
| Need | Feature |
|---|---|
| Accepts all | Workers |
| Easy admin | For volume |
| Variable contributions | Possible |
| Quick processing | Each period |
Common Choices
| Provider | Why Suitable |
|---|---|
| NEST | Must accept all |
| People's Pension | Good for agencies |
| NOW: Pensions | Variable contributions |
Costs
Agency Absorbs
| Cost | Impact |
|---|---|
| Employer contribution | 3% minimum |
| Administration | System costs |
| Compliance | Resource |
Pricing Implications
| May | Pass On |
|---|---|
| In rates | To hirers |
| Cost of | Employment |
| Market rates | Affected |
Record Keeping
Agency Records
| Keep | For Each Worker |
|---|---|
| Assessments | Each period |
| Enrolments | Dates |
| Contributions | Amounts |
| Communications | Copies |
Challenge
| Volume | Solution |
|---|---|
| Many workers | Automated systems |
| Variable data | Good software |
| Compliance | Regular audits |
Common Scenarios
Scenario 1: Regular Agency Worker
| Situation | Position |
|---|---|
| Works weekly | Through agency |
| £600/week | Regular |
| Age 30 | Working age |
| Eligible | Agency enrols |
Scenario 2: Sporadic Work
| Situation | Position |
|---|---|
| Some weeks works | Some not |
| Variable earnings | £100-£500 |
| Assess each | Pay period |
| May become | Eligible some weeks |
Scenario 3: Multiple Agencies
| Situation | Position |
|---|---|
| Uses 2 agencies | Separately |
| £300 from each | Per week |
| Each assesses | Their portion |
| Neither may | Reach threshold alone |
Summary
Key Points
| Element | Detail |
|---|---|
| Agency | Is usually employer |
| Hirer | No duties usually |
| Variable earnings | Assess each period |
| Full duties | Apply to agency |
Agency Duties
| Must | Do |
|---|---|
| Assess workers | Each period |
| Enrol eligible | When qualify |
| Contribute | 3% minimum |
| Communicate | Required letters |
| Declare | To TPR |
Related answers
Auto-Enrolment Overview
What is workplace pension auto-enrolment? Understand the UK's automatic enrolment system and employer duties for pension contributions.
Eligible Jobholders for Auto-Enrolment
Who is an eligible jobholder for pension auto-enrolment? Understand the criteria for automatic pension enrolment.
Workforce Assessment for Auto-Enrolment
How do you assess workers for pension auto-enrolment? Understand the process of categorising your workforce.
Frequently Asked Questions
- Who is responsible for auto-enrolling agency workers?
- The employment agency that pays the worker is usually the employer for auto-enrolment purposes. They must assess, enrol eligible workers, and make contributions. The hirer has no auto-enrolment duties for agency staff.
- How are agency workers assessed for auto-enrolment?
- Agency workers are assessed like any other worker - based on age, earnings, and working in the UK. Variable hours and earnings can make assessment complex, requiring assessment each pay period.
- What if an agency worker works for multiple clients?
- The agency assesses based on total earnings they pay the worker, regardless of which client they're working for. Each agency is a separate employer if the worker uses multiple agencies.