Auto enrolment thresholds sit at the centre of an employer’s legal duties under the Pensions Act 2008. They determine who must be assessed, who qualifies as an eligible jobholder and when an organisation becomes legally responsible for putting a worker into a pension scheme. Thresholds also shape payroll configuration, contribution calculations based on qualifying earnings and the level of scrutiny HR teams must apply to workers’ pay reference periods throughout the year. When HR professionals understand these thresholds in detail, including their interaction with re-enrolment duties and enforcement powers exercised by The Pensions Regulator, they can prevent breaches, avoid enforcement action and ensure the organisation meets its obligations to workers.
What this article is about
This article provides a comprehensive explanation of auto enrolment thresholds for HR professionals and business owners. It explains how the thresholds work in law, which thresholds apply each year, how to assess workers against them using pay reference periods, and what must happen when a worker meets a threshold that triggers employer duties. The guide also addresses complex areas such as fluctuating earnings, bonuses, commission, salary sacrifice and irregular pay patterns, and outlines how these affect eligibility and contribution calculations. It concludes with practical compliance actions for HR teams, including ongoing monitoring, three-year re-enrolment duties and record-keeping requirements, and answers common questions employers face.
Section A: Understanding auto enrolment thresholds
Auto enrolment thresholds determine the point at which an employer’s statutory pension duties apply to a worker. These thresholds form the legal mechanism for identifying who must be assessed, who qualifies as an eligible jobholder and when an organisation becomes legally responsible for putting a worker into a pension scheme. Thresholds apply to workers rather than employees only, meaning that some agency workers and certain contractors can fall within scope. Directors are usually exempt unless they have a contract of employment and there is more than one director in the company. Because employer duties differ depending on the worker’s category and earnings, HR teams must understand how these thresholds operate across different types of worker and how they align with the pay reference periods used for assessment.
1. What thresholds mean in law
Thresholds are set by the UK government under the Pensions Act 2008 and related regulations and are reviewed each year. They define specific earnings points that employers must apply when assessing workers for automatic enrolment during the relevant pay reference period. These thresholds are legally binding and directly influence whether a worker qualifies as an eligible jobholder, a non-eligible jobholder or an entitled worker. Each category carries different employer responsibilities, such as automatic enrolment, the right to opt in with employer contributions or the right only to join a scheme. Because the thresholds are embedded in the legislation and The Pensions Regulator’s guidance, employers must treat them as hard legal triggers rather than discretionary benchmarks.
2. Why thresholds determine employer duties
Employer pension duties arise only when specific age and earnings conditions are met, and the thresholds govern these earnings conditions. For the purposes of determining eligibility, the earnings trigger is applied to a worker’s gross earnings in the pay reference period, not to qualifying earnings. If a worker is aged between 22 and state pension age and meets or exceeds the earnings trigger, they are an eligible jobholder and must be automatically enrolled. If their gross earnings fall below the trigger but at or above the lower qualifying earnings limit, they may be a non-eligible jobholder with a statutory right to opt in and receive employer contributions. When gross earnings fall below the lower qualifying earnings limit, the worker may still be an entitled worker with the right to join a scheme, but without a duty on the employer to contribute. Misinterpreting the thresholds can lead to incorrect categorisation and auto enrolment decisions, which in turn exposes the employer to intervention and enforcement action by The Pensions Regulator.
3. The link between thresholds, eligible jobholders and assessment
Assessing a worker’s category requires applying the thresholds to the correct pay reference period for that worker, which is aligned to their normal pay frequency. An eligible jobholder is a worker aged between 22 and state pension age who earns gross pay above the annual earnings trigger (pro-rated for the relevant pay reference period). Non-eligible jobholders and entitled workers are identified in the same way by comparing gross earnings against the thresholds. HR teams must apply the thresholds consistently to each pay reference period, taking account of pay frequency, fluctuating earnings and any changes over time, such as a worker’s birthday moving them into or out of the eligible jobholder age band. This analysis must also be revisited on the employer’s re-enrolment date every three years, when all previously opted-out eligible jobholders must be reassessed against the thresholds and re-enrolled where conditions are met.
4. How the thresholds interact with pension scheme rules
Thresholds determine who must be enrolled and what rights other workers have, but pension scheme rules dictate how contributions are calculated once a worker is in the scheme. Under the qualifying earnings model, contributions are based on qualifying earnings, which sit between the lower and upper qualifying earnings limits. These limits do not affect the earnings trigger itself but instead define the band of earnings on which minimum statutory contributions must be calculated. Employers using schemes that certify on alternative bases, such as basic pay or total earnings, must still apply the thresholds to determine eligibility and then ensure their chosen certification basis meets or exceeds the statutory minimum level. This interplay makes it vital for HR teams to understand both how thresholds trigger enrolment duties and how they link to contribution calculations so that scheme design, payroll configuration and legal obligations all remain aligned.
Section A Summary: Auto enrolment thresholds establish the legal framework for assessing workers and determining employer duties. HR teams must understand how thresholds define worker categories, trigger automatic enrolment obligations and interact with qualifying earnings and pension scheme rules. Consistent, accurate application of the thresholds across all workers and pay reference periods, including at the three-year re-enrolment date, is key to meeting legal requirements and avoiding compliance risks or regulatory enforcement.
Section B: The three key auto enrolment thresholds
Auto enrolment operates through three statutory thresholds that determine when employer duties arise and how contributions must be calculated. HR teams must understand each threshold separately and how each interacts with worker assessment, payroll configuration and pension scheme rules. Although these thresholds are reviewed annually by the government, and the earnings trigger has remained unchanged for several years, employers must not assume they will remain static. Accurate application prevents misclassification of workers and ensures compliance with the Pensions Act 2008 and associated regulations.
1. The earnings trigger for auto enrolment
The earnings trigger is the gross earnings level in the pay reference period at which an employer must automatically enrol a worker into a qualifying workplace pension scheme. It applies to workers aged between 22 and state pension age who meet or exceed the relevant pro-rated threshold. The trigger is applied to gross earnings, not to qualifying earnings. Where a worker’s gross earnings fluctuate, and exceed the earnings trigger only occasionally, employers must enrol the worker as soon as the trigger is met for that pay reference period unless postponement has lawfully been applied in advance. The trigger is subject to annual review and has been frozen since the 2014/15 tax year, but employers must still check the updated figure each year.
2. The lower qualifying earnings limit
The lower qualifying earnings limit marks the minimum level of qualifying earnings from which statutory minimum pension contributions begin to accrue. A worker whose gross earnings fall below the earnings trigger but whose qualifying earnings fall at or above the lower qualifying earnings limit may be classified as a non-eligible jobholder and can opt into the scheme, with the employer required to contribute. For workers who are automatically enrolled, the lower limit defines the starting point for calculating qualifying earnings for contribution purposes unless the scheme uses a certified alternative method of calculation.
3. The upper qualifying earnings limit
The upper qualifying earnings limit represents the maximum earnings level on which statutory minimum pension contributions are required under the qualifying earnings model. Earnings above the upper limit do not attract mandatory employer or employee contributions. This limit is aligned with other national insurance thresholds and ensures that contributions for eligible jobholders are calculated on a banded basis. Employers using schemes that base contributions on contractual or total earnings must still understand the statutory upper limit for certification and compliance purposes, even where contributions are calculated differently in practice.
4. HMRC and DWP methodology for setting annual thresholds
The Department for Work and Pensions conducts an annual review of the auto enrolment thresholds in consultation with HM Treasury and HMRC. The review considers economic conditions, labour market analysis and tax thresholds to determine whether the thresholds should be increased, decreased or maintained. While the earnings trigger has remained unchanged for several years, the annual review process continues, and employers must update payroll systems and assessment processes in line with any changes. Public consultations often accompany the review, providing insight into government policy direction and potential future amendments.
Section B Summary: The three auto enrolment thresholds—the earnings trigger, the lower qualifying earnings limit and the upper qualifying earnings limit—provide the legal structure for assessing eligibility and calculating statutory minimum pension contributions. Understanding how each threshold functions, and how annual reviews affect them, is essential for accurate payroll processing and compliance with employer duties under the Pensions Act 2008.
Section B: The three key auto enrolment thresholds
Auto enrolment operates through three statutory thresholds that determine when employer duties arise and how contributions must be calculated. HR teams must understand each threshold separately and how each interacts with worker assessment, payroll configuration and pension scheme rules. Although these thresholds are reviewed annually by the government, and the earnings trigger has remained unchanged for several years, employers must not assume they will remain static. Accurate application prevents misclassification of workers and ensures compliance with the Pensions Act 2008 and associated regulations.
1. The earnings trigger for auto enrolment
The earnings trigger is the gross earnings level in the pay reference period at which an employer must automatically enrol a worker into a qualifying workplace pension scheme. It applies to workers aged between 22 and state pension age who meet or exceed the relevant pro-rated threshold. The trigger is applied to gross earnings, not to qualifying earnings. Where a worker’s gross earnings fluctuate, and exceed the earnings trigger only occasionally, employers must enrol the worker as soon as the trigger is met for that pay reference period unless postponement has lawfully been applied in advance. The trigger is subject to annual review and has been frozen since the 2014/15 tax year, but employers must still check the updated figure each year.
2. The lower qualifying earnings limit
The lower qualifying earnings limit marks the minimum level of qualifying earnings from which statutory minimum pension contributions begin to accrue. A worker whose gross earnings fall below the earnings trigger but whose qualifying earnings fall at or above the lower qualifying earnings limit may be classified as a non-eligible jobholder and can opt into the scheme, with the employer required to contribute. For workers who are automatically enrolled, the lower limit defines the starting point for calculating qualifying earnings for contribution purposes unless the scheme uses a certified alternative method of calculation.
3. The upper qualifying earnings limit
The upper qualifying earnings limit represents the maximum earnings level on which statutory minimum pension contributions are required under the qualifying earnings model. Earnings above the upper limit do not attract mandatory employer or employee contributions. This limit is aligned with other national insurance thresholds and ensures that contributions for eligible jobholders are calculated on a banded basis. Employers using schemes that base contributions on contractual or total earnings must still understand the statutory upper limit for certification and compliance purposes, even where contributions are calculated differently in practice.
4. HMRC and DWP methodology for setting annual thresholds
The Department for Work and Pensions conducts an annual review of the auto enrolment thresholds in consultation with HM Treasury and HMRC. The review considers economic conditions, labour market analysis and tax thresholds to determine whether the thresholds should be increased, decreased or maintained. While the earnings trigger has remained unchanged for several years, the annual review process continues, and employers must update payroll systems and assessment processes in line with any changes. Public consultations often accompany the review, providing insight into government policy direction and potential future amendments.
Section B Summary: The three auto enrolment thresholds—the earnings trigger, the lower qualifying earnings limit and the upper qualifying earnings limit—provide the legal structure for assessing eligibility and calculating statutory minimum pension contributions. Understanding how each threshold functions, and how annual reviews affect them, is essential for accurate payroll processing and compliance with employer duties under the Pensions Act 2008.
Section C: Assessing workers against the thresholds
Accurate worker assessment is central to meeting auto enrolment duties. HR teams must evaluate each worker’s age and earnings in every pay reference period to determine whether they meet or exceed the thresholds that trigger employer responsibilities. This is not a single annual exercise but an ongoing statutory requirement. Because workers’ earnings may fluctuate due to overtime, bonuses, commission, variable hours, or salary sacrifice adjustments, an employer’s duties can be activated at any point during the year. Ensuring assessments are consistent and precise prevents errors that can lead to non-compliance, backdated contributions or enforcement action by The Pensions Regulator.
1. How to assess pay periods
Employers must assess workers based on their “pay reference period” (PRP), the formal regulatory term aligned with the worker’s normal pay frequency. Weekly, fortnightly, four-weekly or monthly PRPs require applying the statutory thresholds on a proportionate basis. The assessment must use actual gross earnings paid in the period, not projected or averaged amounts. Payroll systems must therefore monitor real-time earnings and flag when a worker’s gross pay meets or exceeds the pro-rated earnings trigger. If a worker’s pay frequency changes, employers must adjust threshold calculations accordingly and reassess the worker from the date the new PRP begins.
2. Handling variable, irregular and fluctuating earnings
Many workers have earnings that vary each PRP, including seasonal staff, shift workers, casual workers and those receiving irregular bonuses or commission. Employers must reassess these workers at every PRP to identify when they meet the earnings trigger. A worker who does not qualify in one period may qualify in the next. HR teams should maintain clear communications with workers to explain why eligibility status can change and must maintain documented assessment records to evidence compliance in the event of a regulatory review.
3. Treatment of bonuses, overtime, commission and salary sacrifice
Earnings for the purpose of applying the earnings trigger consist of taxable gross pay, including bonuses, commission, overtime, statutory payments and any other income subject to PAYE. A large or irregular bonus may cause a worker to exceed the earnings trigger for that PRP, requiring automatic enrolment. Salary sacrifice arrangements reduce contractual pay for tax efficiency, but employers must apply the earnings trigger to the reduced (post-sacrifice) gross earnings. Employers must also ensure that salary sacrifice arrangements do not reduce pay below the National Minimum Wage. Once enrolled, contributions are calculated on qualifying earnings, which may differ from gross earnings used to assess eligibility.
4. Reassessments and monitoring duties
Employers must continue to assess workers throughout employment, even after the initial staging date or re-enrolment date. This includes monitoring workers whose gross earnings place them below the earnings trigger but at or above the lower qualifying earnings limit, since these workers may opt in at any time. HR teams must also track birthdays that move workers into or out of the eligible jobholder age band, reassess workers who have opted out within the statutory re-enrolment cycle, and ensure full reassessment at the employer’s three-year re-enrolment date. Clear and auditable records are essential, as The Pensions Regulator may request evidence of assessments, payroll rules and communications at any time.
Section C Summary: Assessing workers against auto enrolment thresholds requires consistent application of the thresholds to the correct pay reference periods, careful attention to fluctuating earnings and an understanding of the interaction between gross earnings (for eligibility) and qualifying earnings (for contributions). Employers must monitor workers continuously, comply with the three-year re-enrolment duty and retain clear assessment records to meet their statutory obligations.
Section D: Employer duties when thresholds are met
Once a worker meets the age and earnings thresholds for automatic enrolment, an employer’s legal duties activate immediately. These duties are prescriptive, time-bound and enforceable by The Pensions Regulator. HR teams must ensure that payroll systems, assessment processes and communication workflows operate seamlessly so that no duty is overlooked when a worker crosses the threshold. Failure to comply can lead to arrears of contributions, backdated enrolment obligations and enforcement action that may include financial penalties. Understanding what must happen, when it must happen and how compliance must be evidenced is critical to effective pension governance.
1. Enrolment duties and timelines
When a worker qualifies as an eligible jobholder by meeting the earnings trigger within the pay reference period, the employer must automatically enrol them into a qualifying pension scheme. Enrolment must take place within six weeks of the date the worker became eligible. This includes creating scheme membership, passing worker information to the pension provider and ensuring payroll deduction structures are applied correctly from the appropriate period. Employers cannot delay enrolment unless postponement has been formally invoked at one of the statutory postponement points: on the employer’s duties start date, on a worker’s first day of employment or on the date a worker later becomes eligible.
2. Communications to workers
Employers have a statutory obligation to issue written communications when auto enrolment duties arise. These communications must explain the worker’s eligibility status, their automatic enrolment into the pension scheme, contribution levels and their right to opt out. Specific statutory wording must be included, and deadlines for issuing these communications are strict. Employers must ensure templates meet regulatory requirements and that clear guidance is provided on opt-out processes, statutory timeframes and the implications of remaining in or leaving the scheme.
3. Employer and employee contribution duties
Once a worker is enrolled, employers must begin deducting and paying statutory minimum pension contributions based on qualifying earnings unless a certified alternative calculation method is used. Contributions must be applied from the correct PRP and calculated using the lower and upper qualifying earnings limits, not gross earnings used for eligibility assessment. Contribution errors commonly arise where fluctuating income is misclassified or where elements of pay such as bonuses or commission are overlooked. Contributions continue unless the worker opts out within the permitted timeframe or leaves employment.
4. Compliance, record-keeping and enforcement risks
The Pensions Regulator requires employers to maintain accurate and auditable records of assessments, communications, enrolment activity and contributions. These records must generally be retained for at least six years. Non-compliance may result in enforcement action, including fixed penalty notices of £400, escalating penalty notices ranging from £50 to £10,000 per day depending on employer size, and civil penalties of up to £5,000 for individuals or £50,000 for corporate bodies in cases involving unpaid contributions. HR teams must therefore implement effective governance systems that track assessments, verify payroll accuracy and ensure compliance processes remain in place throughout the worker’s employment and at re-enrolment.
Section D Summary: When a worker meets auto enrolment thresholds, employers must promptly fulfil their legal duties. This includes enrolling the worker within statutory deadlines, issuing compliant communications, applying correct contribution calculations and maintaining robust compliance records. Strong governance and accurate payroll configuration reduce compliance risks and ensure sustained alignment with regulatory expectations.
FAQs
What are the current auto enrolment thresholds?
Each tax year the government sets three key thresholds: the earnings trigger for automatic enrolment, the lower qualifying earnings limit and the upper qualifying earnings limit. These thresholds apply on a pro-rated basis to the worker’s pay reference period. Employers must check annual updates published by the Department for Work and Pensions to ensure accuracy in assessment and payroll configuration.
Do thresholds include overtime or bonuses?
Yes. For eligibility assessment, the earnings trigger applies to gross PAYE-taxable earnings, including overtime, bonuses, commission and statutory payments. A one-off bonus can cause a worker to exceed the earnings trigger for that pay reference period, activating automatic enrolment duties unless postponement has been applied in advance.
What happens if a worker’s earnings fall below the trigger after enrolment?
A worker who has been automatically enrolled cannot be removed from the scheme simply because their earnings fall below the trigger in a later pay reference period. Employer contributions must continue unless the worker chooses to opt out or ceases membership. The only time an employer may re-enrol a previously opted-out worker is at the statutory re-enrolment date every three years, which requires a fresh assessment against the thresholds at that point.
Must employers enrol part-time or variable-hours workers?
Yes. If a worker meets the age and gross earnings criteria within any pay reference period, they must be automatically enrolled regardless of whether their hours are full-time, part-time, casual or seasonal. Employers must reassess all workers every pay reference period, as eligibility may change from one period to the next.
How often should HR reassess workers against thresholds?
Workers must be assessed in every pay reference period, as well as at the employer’s statutory three-year re-enrolment date. Reassessment is also required when pay frequencies change, when salary sacrifice arrangements alter contractual pay, when workers reach key birthdays relevant to jobholder categorisation and when previously opted-out workers reach the re-enrolment point.
FAQs
What are the current auto enrolment thresholds?
Each tax year the government sets three key thresholds: the earnings trigger for automatic enrolment, the lower qualifying earnings limit and the upper qualifying earnings limit. These thresholds apply on a pro-rated basis to the worker’s pay reference period. Employers must check annual updates published by the Department for Work and Pensions to ensure accuracy in assessment and payroll configuration.
Do thresholds include overtime or bonuses?
Yes. For eligibility assessment, the earnings trigger applies to gross PAYE-taxable earnings, including overtime, bonuses, commission and statutory payments. A one-off bonus can cause a worker to exceed the earnings trigger for that pay reference period, activating automatic enrolment duties unless postponement has been applied in advance.
What happens if a worker’s earnings fall below the trigger after enrolment?
A worker who has been automatically enrolled cannot be removed from the scheme simply because their earnings fall below the trigger in a later pay reference period. Employer contributions must continue unless the worker chooses to opt out or ceases membership. The only time an employer may re-enrol a previously opted-out worker is at the statutory re-enrolment date every three years, which requires a fresh assessment against the thresholds at that point.
Must employers enrol part-time or variable-hours workers?
Yes. If a worker meets the age and gross earnings criteria within any pay reference period, they must be automatically enrolled regardless of whether their hours are full-time, part-time, casual or seasonal. Employers must reassess all workers every pay reference period, as eligibility may change from one period to the next.
How often should HR reassess workers against thresholds?
Workers must be assessed in every pay reference period, as well as at the employer’s statutory three-year re-enrolment date. Reassessment is also required when pay frequencies change, when salary sacrifice arrangements alter contractual pay, when workers reach key birthdays relevant to jobholder categorisation and when previously opted-out workers reach the re-enrolment point.
Conclusion
Auto enrolment thresholds underpin an employer’s statutory duties under the Pensions Act 2008. HR teams that understand how the thresholds operate, how they interact with worker categories and how earnings fluctuations influence eligibility can ensure assessments are accurate and compliant. The thresholds also shape contribution calculations based on qualifying earnings, communication obligations and record-keeping requirements, all of which must align with the organisation’s pension governance framework.
Correct application of the earnings trigger and qualifying earnings limits allows employers to identify eligible jobholders promptly, enrol them within statutory deadlines and maintain compliance throughout employment. With The Pensions Regulator expecting accurate assessments, comprehensive records and adherence to the three-year re-enrolment cycle, HR professionals must ensure payroll systems are correctly configured, assessments are carried out at every pay reference period and salary sacrifice arrangements do not undermine compliance. By reviewing thresholds annually, reassessing workers continuously and maintaining clear audit trails, employers reduce compliance risk and support workers’ long-term financial wellbeing.
Glossary
| Earnings trigger | The annual gross earnings level at which an employer must automatically enrol an eligible jobholder. Applied on a pro-rated basis to the worker’s pay reference period. |
| Eligible jobholder | A worker aged between 22 and state pension age who earns at or above the earnings trigger and must be automatically enrolled into a qualifying pension scheme. |
| Non-eligible jobholder | A worker who does not meet the earnings trigger or age criteria for automatic enrolment but who can opt in and receive employer contributions if their qualifying earnings meet the statutory minimum. |
| Entitled worker | A worker who earns below the lower qualifying earnings limit but has the right to join a pension scheme, without the employer being required to contribute. |
| Qualifying earnings | The band of earnings between the lower and upper qualifying earnings limits used to calculate statutory minimum pension contributions. |
| Lower qualifying earnings limit | The minimum earnings point from which statutory pension contributions begin to accrue for workers who are enrolled or who opt in. |
| Upper qualifying earnings limit | The maximum earnings level on which statutory minimum contributions are required under the qualifying earnings model. |
| Pay reference period (PRP) | The period aligned with a worker’s normal pay frequency used for assessing eligibility for auto enrolment. |
| Postponement | A mechanism that allows employers to delay assessing and enrolling workers for up to three months from the duties start date, the worker’s first day of employment or the date a worker becomes eligible. |
| Re-enrolment | The statutory requirement to reassess and re-enrol eligible jobholders who previously opted out, once every three years on the employer’s re-enrolment date. |
Useful Links
| GOV.UK – Automatic enrolment guidance | Official employer duties and compliance guidance |
| The Pensions Regulator – Employer duties | Guidance on assessment, enrolment, re-enrolment and enforcement |
| DWP – Annual review of thresholds | Annual review publications and threshold updates |
| HMRC – PAYE and earnings definitions | Guidance on taxable earnings used in eligibility assessment |
