Avoid risk of pension auto-enrolment obligations
A lot of companies are owned and operated by their directors, who extract profits through a small salary and dividend. Such companies may have been classed as ‘non-employers’ for workplace pension purposes, and they will therefore be avoiding auto-enrolment obligations. This is on the basis of having made a declaration to the Pensions Regulator that there is no written or implied contract of employment.
With SSP being funded by the Government (see Repayment of SSP), it may be tempting for the directors to claim SSP for themselves to help towards their cash flow concerns. However, by doing so, the directors may run the risk of creating an implied contract of employment, which could leave them in breach of their auto-enrolment obligations.
The position is not currently clear, and given that SSP is only being funded for 14 days, a director in this position may wish to consider whether it is worth taking the risk. For more on auto-enrolment, see the Automatic enrolment ― overview guidance note.