£42k fine for auto enrolment non-compliance

10 May 2017

Johnsons Shoes Company had an automatic enrolment staging date of 1 May 2014 and were due to complete their declaration of compliance by 30 September 2014, but failed to meet the deadline.

The Pensions Regulator (TPR) had regularly attempted to communicate with Johnsons to educate and enable them to meet their duties, but their lack of action led TPR to use a number of their enforcement powers.

Firstly a Fixed Penalty Notice (FPN) of £400 was issued. Johnsons refused to pay this and asked TPR to carry out a review of the FPN saying that pressures of work were to blame for not meeting their duties. TPR do not consider this to be a reasonable excuse, as they had sent Johnsons several reminders in the 12 months before the date their duties began to apply and they’d had significant time to prepare.

An Escalating Penalty Notice (EPN) was issued; a £2,500 daily fine based on the number of employees in Johnsons PAYE scheme. This eventually amounted to £40,000.

Johnsons also failed to pay the EPN, so TPR lodged a money claim in the County Court to recover the debt. The end result being that Johnsons had to pay the fine in full, including the £2,000 court fee TPR had to pay to start the claim.

Johnsons are now compliant with their automatic enrolment duties and the staff in their pension scheme are in the same position as they would have been had Johnsons automatically enrolled them on the staging date.

As TPR state in their regulatory intervention report, this case illustrates the need to engage early with them where they have identified non-compliance. Johnsons’ initial lack of action led to further delays in complying with their duties, and as a result the intervention escalated from a focus on remedial action to one of sanction and redress.

Had Johnsons acted quickly, a £40,000 fine, court action and a £2,000 court fee could have been avoided.