Does Auto-Enrolment Pension Apply to Family Companies?


Where auto-enrolment applies it is not optional.  An employer must enrol all of its employees.into its workplace pension.  Employees that are eligible are allowed to voluntarily opt out.  Employers including small family companies must assess the workforce regularly as those eligible can change and this can be a time consuming arduous task.  There are some exceptions:

Sole Director Company

If you are a sole director of a company and do not have any other employees then auto-enrolment does not apply.  If The Pensions Regulator has contacted your business about auto-enrolment complete an online form to notify them that your business is outside the scope of auto-enrolment.

Husband and Wife Companies

The situation for husband and wives is slightly more complicated.

  • if you are both Directors and neither have a contract of employment then auto-enrolment does not apply.  Likewise if you are both Directors and only one of you has a contract of employment then auto-enrolment still does not apply.
  • if one of you is a Director and the other an employee then auto-enrolment would apply to just the employee
  • if the Director also has a contract of employment then auto-enrolment would apply to the Director also

Larger Family Companies

The situation is similar to that of the husband and wife company.  Your business may be made up of Directors or a mixture of Directors and employees.  The defining factor is whether employment contracts are in place.  If they are then auto-enrolment applies.

All Companies

As a general rule of thumb a company has only one Director with an employment contract, sometimes called a service contract, auto-enrolment doesn’t apply. Conversely, where two or more Directors have contracts, auto-enrolment applies and you must decide if those Directors with contracts are eligible to be included in your workplace pension.

If your company has employees who are not directors auto-enrolment will always apply regardless of whether or not they have contracts.

If everyone is a Director and the company wishes to avoid auto-enrolment, consider whether you can dispose of employment contracts that exist.


The position for family companies depends on whether the company has employees that are not Directors.  If it does then auto-enrolment will apply.  If it has Directors and no employees then auto-enrolment will only apply where there are two or more of them with employment contracts.  Sole Director companies aren’t affected by auto-enrolment.


The information contained in this article is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. The application and impact of laws can vary widely based on the specific facts involved. Given the changing nature of laws, rules and regulations, and the inherent hazards of electronic communication, there may be delays, omissions or inaccuracies in information contained in this article. Accordingly, the information on this article is provided with the understanding that the authors and publishers are not herein engaged in rendering legal, accounting, tax, or other professional advice or services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser.

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