Director-only companies have specific auto-enrolment considerations.
Directors and Worker Status
The Key Question
Factor Determines Employment contract Worker status How paid Part of analysis Relationship With company
With Employment Contract
Position Detail Is a worker For auto-enrolment Assess normally Age, earnings May be eligible For enrolment Duties apply Standard duties
Without Employment Contract
Position Detail Not a worker For auto-enrolment Not assessed No category No enrolment Required No duties Apply to them
Director-Only Companies
If No Employment Contracts
Situation Duties Directors only May have no duties No workers No one to enrol Dividends only Not earnings But check Carefully
If Any Director Has Contract
Situation Duties At least one Has contract Is a worker Must assess Duties start When they start Full compliance Required
Assessing Directors with Contracts
Apply Normal Criteria
Criterion Check Age 22 to SPA Earnings Over £10,000 Working in UK
What Counts as Earnings
Include As Earnings Salary Yes Bonus Yes Directors' fees If under contract Not dividends Not earnings
Example
Director Details Category Age 45, salary £30,000 Eligible Age 45, dividends only Not worker Age 25, salary £8,000 Non-eligible
Common Structures
Salary Plus Dividends
Structure Position Small salary May be under threshold Plus dividends Not earnings Assessment on Salary only
Example
| Income | £50,000 total |
| Salary | £12,570 |
| Dividends | £37,430 |
| Assessment | On £12,570 |
| Threshold | Over £10,000 = eligible |
Low Salary Structure
Income Position Salary £9,100 Under threshold Below £10,000 Non-eligible No auto-enrolment Required But can opt in If wished
Pension Considerations
Benefits of Being Eligible
Advantage Detail Tax relief On contributions Employer contribution From company Corporation tax Relief Building pot For retirement
Trade-Offs
Factor Consideration Lower salary Less NI But less pension Contributions Tax planning Complex Personal choice What works
Single Director Companies
Just You
Situation Position Sole director No staff No contract No duties Have contract Assess yourself Your choice Structure
If You Want a Pension
Option Approach Have contract Become eligible Salary over threshold £10,000+ Auto-enrolled Into scheme Contributions Tax efficient
If You Don't Want Pension
Option Approach No contract Not a worker Dividends only No duties But tax May be higher Personal pension Alternative
Adding Employees
When You Hire
Event Duties First employee Duties start Assess everyone Including directors Full compliance Required
Directors Then Caught
If Previously No Duties Now have employee Duties apply Directors assessed As workers (if contract) Everything Kicks in
Documentation
Proving No Duties
Record Why No contracts Evidence Board minutes Decisions Payment records Dividends only HMRC records No PAYE
If Have Duties
Record Why Employment contracts Worker status Assessment Categories Compliance Evidence Declaration To TPR
Common Scenarios
Scenario 1: Two Directors, No Staff
Situation Position Both directors Only No contracts Neither Dividends only No earnings No duties Apply
Scenario 2: Director Plus One Employee
Situation Position One director No contract One employee Has contract Duties start Employee start Director Not assessed Employee Assessed
Scenario 3: Director with Contract
Situation Position Director Has contract Salary £40,000 Over threshold Age 50 Working age Eligible Must be enrolled
Tax Planning
Pension vs Dividends
Factor Pension Dividends Tax relief Yes No Employer contribution Tax deductible N/A NI Possible savings None Access From 55/57 Immediate
Seek Advice
For Recommendation Tax planning Accountant Pension strategy Financial adviser Business structure Specialist
Summary
Key Question
Factor Determines Employment contract Worker status If contract Assess normally If no contract Not a worker
Duties
Situation Duties Apply Directors only, no contracts No Directors with contracts Yes Directors plus employees Yes Any worker Triggers duties
Frequently Asked Questions
Do company directors have to be auto-enrolled? Only if they have an employment contract with the company. Directors with no contract who only receive dividends aren't workers, so auto-enrolment duties don't apply to them. Those with contracts are assessed like any employee.
Does a company with only directors have auto-enrolment duties? It depends whether the directors are workers. If directors have no employment contracts and receive only dividends, there are no workers, so no duties apply. If any director has a contract, duties apply from their start date.
Should I have an employment contract as a director? There are tax and pension implications either way. Without a contract, you may not be auto-enrolled but also can't access PAYE pension contributions easily. With a contract, you can be auto-enrolled and receive employer contributions. Disclaimer: This information is for general guidance only and does not constitute legal advice. Employment law is complex and changes frequently. For specific situations, consult ACAS, a qualified employment lawyer, or HR professional.