Workplace pensions and payroll: what an employer must do

acrenvo.com/guides/workplace-pensions-and-payroll, last reviewed 21 October 2026

Kemi is fictional. Kemi runs a hair salon as a sole trader and is about to take on a full-time stylist in their late twenties, the first person Kemi has ever employed. Payroll is under way, but Kemi has heard that employers must also provide a pension and is not sure what that means in practice or when it starts. This guide sets out the employer’s duty as GOV.UK and The Pensions Regulator describe it. It does not name or compare pension schemes, and it is not financial advice.

When the duty starts

The duty begins with the first employee rather than at some later point. Employers have to provide a workplace pension scheme for eligible staff as soon as their first member of staff starts working for them (known as your ‘duties start date’). You’re usually an employer if you deduct tax and National Insurance contributions from an employee’s wages.

The Pensions Regulator puts it this way: “Your workplace pension legal duties begin on the day your first member of staff starts work. This is known as your duties start date. Even if you think you won't need to put your staff into a scheme, you'll still have duties.”

Who you must enrol

Not everyone has to be put into a scheme straight away, but GOV.UK sets out who does. You must enrol and make an employer’s contribution for all staff who:

• are aged between 22 and the State Pension age
• earn at least £10,000 a year
• normally work in the UK (this includes people who are based in the UK but travel abroad for work)

Staff can move into that group later. If staff become eligible because of a change in their age or earnings, you must put them into your pension scheme and write to them within 6 weeks of the day they meet the criteria.

Kemi’s stylist will be over 22, well short of State Pension age and working in the UK, so if their pay comes to at least £10,000 a year, Kemi must enrol them and pay in.

The Pensions Regulator’s four steps

The Pensions Regulator sets out what a new employer does, and by when, as four steps.

1. “Choose a pension scheme that can be used for automatic enrolment and put your staff into it. Do this as soon as possible as it may take time”.
2. “Work out who you need to put into a pension scheme on your duties start date. Do this on your duties start date”.
3. “Use our letter templates to write to each member of staff individually to tell them how automatic enrolment applies to them. Do this within 6 weeks after your duties start date”.
4. “Use our declaration of compliance checklist to find out what information you'll need to provide to tell us how you've met your duties. You must complete your declaration by your deadline or you may be fined. Do this within 5 months after your duties start date”.

The Pensions Regulator’s page for employers who have to provide a pension has a duties timeline that works out these dates from your duties start date. GOV.UK points to it as well: “Use The Pensions Regulator’s tool for employers to find out what you need to do and when you need to do it.”

Setting up a scheme

You must set up a workplace pension scheme for eligible staff if you do not already offer one. If you already have a workplace pension scheme that you’d like to use for automatic enrolment, you must ask the provider if it meets the rules.

Acrenvo does not name, compare or recommend pension schemes or providers. Choosing a scheme is the first of The Pensions Regulator’s four steps, and its pages for new employers cover it.

One email a month lists the MTD software price changes we have checked and any changes to HMRC’s list of software. If that would be useful, you can sign up for the monthly price-changes email at the end of this page.

How much goes in

There is a legal minimum for the employer’s share. You must pay at least 3% of your employee’s ‘qualifying earnings’ into your staff’s pension scheme. Check the pension scheme you’re using to find out what counts as ‘qualifying earnings’. Under most schemes, it’s the employee’s total earnings between £6,240 and £50,270 a year before tax.

GOV.UK does not say which tax year that band is for. The Pensions Regulator does: “For the 2026/27 tax year this range is between £6,240 and £50,270 a year (£520 and £4,189 a month, or £120 and £967 a week). These figures are reviewed each year by the government.”

GOV.UK’s table of minimum contributions, which applies from April 2019, shows the employer paying at least 3%, the employee 5%, and 8% in total. The Pensions Regulator says the same: “This is set at 8% of your member of staff's earnings. You, the employer, must pay at least 3% of this, but you can choose to pay more.” These amounts could be higher for you or your employer because of your pension scheme rules. They’re higher for most defined benefit pension schemes.

How payroll handles contributions

Contributions come out of pay and go to the scheme on a monthly cycle, much like the payment to HMRC. You must deduct contributions from your staff’s pay each month. You’ll need to pay these into your staff’s pension scheme by the 22nd day (19th if you pay by cheque) of the next month.

Payroll software can help with this. The Pensions Regulator says: “Payroll software that is set up for automatic enrolment may be able to calculate contributions for you and make the correct deductions from staff pay.” HMRC also needs to know, and among the times GOV.UK lists for adding detail to a Full Payment Submission is when you start paying someone a workplace pension.

The guide to free payroll software suggests asking each supplier whether its product records and pays pension contributions.

The duties that carry on

Setting up the scheme is not the end of the duty. When you’ve set up a workplace pension scheme, you must:

• check if and when staff should be re-enrolled
• manage requests to join and leave your pension scheme
• keep records about how you’ve met your legal duties
• check if existing staff should be added to your pension scheme, for example when they earn a certain amount

Every few years, the employer checks again. Your re-enrolment date is 3 years after your first member of staff starts working for you, and then every 3 years after that. You must complete a re-declaration of compliance every time you carry out your re-enrolment duties, even if staff were not re-enrolled.

Records have their own time limits. You must keep these records for 6 years except for requests to leave your pension scheme which must be kept for 4 years.

GOV.UK’s guidance for staff also sets out what an employer must not do. Your employer cannot:

• unfairly dismiss or discriminate against you for being in a workplace pension scheme
• encourage or force you to opt out

GOV.UK’s guide to setting up and managing a workplace pension scheme covers each of these duties in more detail.

Questions about workplace pensions and payroll