How often do Freelancers need to opt out of the pension scheme with a regular employer?

This is another of those posts that we would urge you to act upon only after having read the footnote (below).

We are periodically contacted by members who work multiple short contracts for the same engager (e.g. a national broadcaster) who are frustrated at being required to opt-out of the company’s auto-enrolment scheme when they start a new engagement. For long-term employees, opt-outs apply for three years.

So why can’t engagers apply the same principle to freelancers?

We asked Stewart Mott, our Pensions Officer, to check this and advise on it. He came back saying that, in his view, he would generally expect members to have to opt out each time they are engaged with a particular employer for a new assignment.

Whilst there are provisions where there is a “single employment relationship”, that would allow an employer to treat a single opt-out across multiple contracts, in Stewart’s experience, this should only be used where there are multiple concurrent contracts as opposed to non-concurrent contracts.

If the situation is that the member is, for example, working with one company, and then leaves to work with another company, before returning to the first one in the same role, we would expect them to be re-enrolled and to need to opt-out each time.

Even when there are concurrent contracts, it is not necessarily the case that this would be considered a ‘single employment relationship’.

It is an employer’s decision to determine whether or not they will apply this duty. The Pensions Regulator has some detailed guidance on what would constitute a single employment relationship” here, and I’m copying the below an extract which shows considerations for whether there is a single employment relationship:

“The key question is whether the employer and the worker consider that multiple contracts in fact operate as one. In the regulator’s view, there are a number of factors an employer can take into account in making the judgment that multiple contracts with a worker operate as a single contract.

Independence of the contracts

  • how independently do the contracts operate?
  • if the employer or the worker terminates one contract what happens to the other(s)? For example, does the worker remain in post in the other(s)

Type of work

  • is the nature of the work in each contract different or is it the same?
  • is the location for working in each contract different?

Benefits

  • looking at an employer’s existing processes, how would they calculate redundancy, attainment of employment rights, etc, for example, is continuous service aggregated across the contracts?
  • is holiday entitlement on the basis of aggregated contracts or is there a separate entitlement for each contract?
  • is maternity pay on the basis of aggregated contracts or is there separate entitlement for each contract?
  • is sick pay on the basis of aggregated contracts or is there a separate entitlement for each contract?
  • does the worker receive their usual pay aggregated across the contracts or are there separate pay arrangements for each contract?”

Stewart is always happy to help members make their case for being treated differently by employers if needed – please contact your branch official mentioning this posting and they will put you in touch with him.

Footnote: The information that this blog provides is only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, and it should not be used in place of professional advice.

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