Do you have to put your freelancers into your pension scheme?
Freelance workers based in the UK have a lot of rights but did you know they have a right to join your workplace pension scheme and must be included in your auto-enrolment?
It sounds a bit daft on the face of it, but here is how it goes for workers based in the UK:
- workers earning less than £5,786 a year have the right to join but you don’t have to make ’employer minimum’ contributions.
- workers earning £5,786 or more a year have the right to join your workplace pension scheme and you must contribute if they do
- workers earning £10,000 or more must be automatically enrolled (unless opted out) and you must contribute
My freelancers are self employed
If you’re thinking – what has this got to do with me as my freelancers are all self-employed? – then you could be in for a shock.
Freelancers can be running their own business, but they can also be categorised as workers (or even employees). Your label on the relationship does not define their status. Nor does the fact they invoice you, or have other clients, always help.
If they don’t have a company and are invoicing you in person there is a risk your freelancer will be categorized as a worker and this may trigger their entitlements.
How to handle freelancers and workplace pensions
- Check whether they are invoicing you via a company or just using a business name
- Check the freelancer’s base – are they working from the UK?
- Check whether you have a written contract with them
- Get that contract reviewed to establish the status
- If no written contract exists (or an out of date one) update it to properly reflect the arrangements between you. Here’s a link to ours.
- Talk to your accountant/payroll/pensions provider and let the know you have potential workers who may be eligible
- Talk to us about how to contract and manage your freelancers in a way that is appropriate for your business