Pension entitlement: who is an eligible worker?

Employers are required to automatically enrol eligible workers in a pension scheme. We look at who may or may not be an ‘eligible worker.’  

Coins and sapling denoting pension entitlement for eligible workers

Eligible workers may opt out of their employer’s pension scheme by giving notice to their employer, but the default position is that they must be automatically enrolled unless they choose to opt out. Even if a worker has opted out, the employer must automatically re-enrol any eligible workers who are not already active members of a pension scheme. We look at the detail:

An eligible worker

To be eligible, a worker must meet the following three conditions as laid out in Section 1 (1) Pensions Act 2008:

  1. They are working under a contract in Great Britain;
  2. They are aged between 22 and state pension age; and
  3. They are paid qualifying earnings by an employer in a relevant pay reference period.

What this means

A worker is an individual who has entered into work under either:

  • A contract of employment. This must be a contract of service or an apprenticeship. These can be either express or implied. If the contract is express, it can be in writing or it can be oral.
  • Any other contract under which an individual undertakes to do work or to perform services personally for another party to the contract. As above, this can be express or implied. If express, it can be oral or in writing. This will not include a contract where the other party is the client or customer or the individual.

This covers a broad spectrum of individuals. It includes permanent employees, temporary employees, agency workers, apprentices and employees with employee shareholder status.

Note that an employee who is engaged purely on a casual basis or on a zero-hours contract may or may not qualify as a worker. This will depend on the specific circumstances of how they are engaged. Similarly, a consultant’s eligibility will have to be assessed on a case-by-case basis.

The Pensions Regulator suggests that an individual’s tax status may be relevant, but it will not determine whether they are eligible.

Qualifying earnings

For the 2021/2022 tax year, ‘qualifying earnings’ are annual earnings of £10,000 and above. Annual earnings refer to the worker’s gross salary or wages, commission, bonuses and overtime. This includes statutory maternity pay, paternity pay, adoption pay and statutory sick pay payable in a pay reference period.

Got more questions? Our employment team are happy to help. 

This article was written by Daniel Bolster

Please note the contents contained in this article are for general guidance only and reflection the position at time of posting. Legal advice should be sought before taking action in relation to specific matters.

More Articles

What happens when we return to work? Advice for employers and employees

As lockdown continues to ease, many employers are now seeing how staff can...

Your questions on… Family Mediation

What issues can be dealt with in family mediation? You can cover all...

90 seconds on… Maintenance

My husband and I are divorcing. Will I get spousal maintenance? If you...

Find out how we can help you


© Peacock & Co 2024. All Rights Reserved.

Peacock & Co is authorised and regulated by the Solicitors Regulation Authority.