Expatriates & UK Workplace Pension Auto-enrolment

17 September 2020

It’s important that international employers with expatriates living and working in the UK consider the implications of local compulsory employee benefit obligations such as employee Workplace Pensions (WPP) and the need to consider what’s commonly referred to as pension ‘Auto-enrolment’.

What is a UK Workplace Pension and what is ‘Auto-enrolment’?

Workplace Pensions were introduced in the UK in 2012 in an effort to increase the level of pension investment individuals make before retirement to reduce reliance on the UK’s State Pension system.

Do I have to assess an expatriate for Workplace Pension Auto-enrolment?

It is important to assess eligibility where an employee is on temporary assignment to the UK, or overseas but is connected to the UK company based on whether they could be deemed as ‘ordinarily working in the UK’ as defined by The Pensions Regulator. If they ‘ordinarily work in the UK’ for these purposes, then you will need to automatically enrol them in an appropriate WPP.

Where expatriates participate in a home country retirement plan, that plan may meet the qualifying criteria for equivalency with a UK WPP, however the process to have that plan recognised by the UK regulator is very onerous.

What is considered ‘Ordinarily Working in the UK’?

An expatriate will typically be considered as ordinarily working in the UK if, on balance most of these conditions apply:

  • they receive their salary payments in GBP;
  • they pay National Insurance Contributions (NICs);
  • the company headquarters is in the UK;
  • their home address is in the UK;
  • they start and finish their working day in the UK; however

Where an expatriate comes to the UK to work for the UK entity but remains an employee of the assigning non-UK company and there is an expectation on the part of the employer that the worker will return to work outside the UK for their non-UK employer at the end of their assignment, the worker is unlikely to be considered to be ordinarily working in the UK.

What next?

It’s important to seek specific advice regarding your expatriate workforce to ensure you can demonstrate that you have carefully considered all of your employees for WPP purposes. The Pension Regulator operates a robust compliance and enforcement policy regarding employers subject to auto-enrolment duties. Please contact us for advice on all aspects of global expansion and employing in the UK including employee benefit compliance, HR, payroll and tax.

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