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Are Directors Exempt from Auto Enrolment?
Last updated:
July 17, 2025
Auto enrolment can become a tricky process as you move up the chain towards becoming a company director. In some cases, directors are treated like any regular worker and must be automatically enrolled into a workplace pension scheme. However, not all directors are required to enrol, some may be exempt from auto enrolment based on their employment status.
So, are directors exempt from auto enrolment? The answer depends on whether they are considered workers under auto enrolment rules. In this article, we explain when directors must be auto enrolled and when they are exempt.
When Are Directors Exempt from Auto Enrolment?
Typically, Directors only need to auto enroll if they are considered a worker, have a contract of employment, and if there is at least one other worker with a contract of employment. If directors are not considered workers, they are usually exempt, even if they have a contract of employment.
Directors Without an Employment Contract
If a Director does not have an employment contract, they cannot be considered a worker and, therefore, are exempt from auto enrolment.
Similarly, if a company only employs Directors without contracts of employment, and employs no other staff, the company is not considered an employer. This means that they are completely exempt from auto enrolment duties.
Directors with an Employment Contract Where there are No Other Workers
Where a Director has a contract of employment, but there are no other contracted workers within a company, they are not classed as a worker themselves and are therefore exempt from auto enrolment.
Even if there are other Directors, or other workers within the company that do not have employment contracts, the sole Director with an employment contract still does not need to be automatically enrolled onto a pension scheme.
Directors with an Employment Contract Who are Not the Only Members of Staff
However, if a Director is not the only member of staff with an employment contract, they are not exempt from auto-enrolment, provided that they fall within the regular auto-enrolment criteria.
In the UK, statutory obligations state that unless specific criteria are met, company directors are usually exempt from auto-enrollment. These obligations apply to employees aged 22 to state pension age earning at least £10,000 annually. Directors may differ based on their employment status. If a director is also an employee receiving a salary via PAYE, they are subject to auto-enrollment. However, most limited company directors pay themselves under £10,000 or lack a formal employment contract, so they typically do not qualify—unless they meet the salary, earnings, and age criteria. Directors paid through dividends are not subject to auto-enrollment, as dividends aren’t pensionable earnings.
Deepak Shukla
CEO of Pearl Lemon Accountants
Do Directors Need to Auto Enrol?
A director must be auto enrolled if they:
- Have a contract of employment AND
- There is at least one other worker in the company with a contract of employment.
If both conditions are met, the director is considered as a worker and must be auto enrolled.
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When is a Director Regarded as a Worker?
Directors are not always regarded as workers. They are only considered a worker if:
- They have a contract of employment
- At least one other person within the company also has a contract of employment. This can be another director or any other member of staff
If a person is a Director of one company but works for another company as an ordinary worker, they will still be considered a worker for the second company, regardless of whether or not they are considered a Director that is also a worker at the first company.
What is the Definition of a Director?
According to the Pensions Regulator, a Director is defined as anyone that holds office as a Director, but not an individual that is a Director in name only. Within companies, Directors are formally appointed under the Companies Act 2006.
Individuals acting as a Director in the sense of having a decision-making role within the corporate governance of the company are also considered Directors, even if they have not been properly appointed.
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Who Has to be Automatically Enrolled?
Now you know more about auto-enrolment for company Directors, it might be a good idea to ensure that you know who else within a company must also be auto-enrolled.
Where there is more than one contracted worker within a company, employers must auto-enroll anyone that meets the following criteria:
- Classed as a worker
- Aged 22 or over, but below the age of state pension
- Working in the UK under a contract of employment
- Earning over £10,000 per year
Workers that meet the above criteria must be automatically enrolled upon starting work, however, they are able to opt out at any stage.
Who Doesn’t Have to be Auto Enrolled?
- An employee has given notice that they are leaving their job, or you, as an employer, have given notice to the employee
- An employee provides evidence of their lifetime allowance protection
- An employee already has an active pension, which the company arranged, that meets the auto-enrolment rules
- An employer receives a one-off payment from a pension scheme that has closed, leaves their job, then returns to the same job within 12 months of payment
- More than 12 months before their staging date, an employee opted out of a pension arranged by the company
- An employee is from an EU member state and is in an EU cross-border pension scheme
- An individual is in a limited liability partnership
- Director that have a contract of employment, and there is at least one other contracted worker within the company
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Auto Enrolment Services in Southend
ARB Accountants offer auto-enrolment services in Southend and across the UK for all employees, including company directors. We’ll handle the complicated, time-consuming administrative duties associated with auto-enrolment, leaving your team to do what they do best.
Contact us today to see how we can take the stress and hassle out of your company’s auto-enrolment process.
Frequently Asked Questions
1. What are the auto enrolment rules for directors?
Auto enrolment rules for directors stipulate that only those directors who have a contract of employment and at least one other person in the company with a similar contract are considered workers. In such cases, these directors must be automatically enrolled into a workplace pension scheme. Conversely, directors without employment contracts or those in companies without other employees are generally exempt from auto enrolment duties.
2. How does auto enrolment apply to company directors?
Auto enrolment for company directors depends on their employment status. If a director is classified as a worker due to having an employment contract and there is at least one other employee with a similar contract, the director is subject to auto enrolment. However, if these conditions aren’t met, the director may be exempt from such duties.
3. Are directors exempt from auto enrolment if they don’t have employment contracts?
Yes, directors without employment contracts are typically exempt from auto enrolment. The absence of an employment contract means they aren’t classified as workers, thereby relieving them of auto enrolment obligations.
4. What is a workplace pension for directors?
A workplace pension for directors functions similarly to those for regular employees, facilitating retirement savings through contributions from both, the director and the company. Depending on their employment status and the company’s structure, directors may or may not be required to participate in such pension schemes.
5. Can directors opt into auto enrolment even if they’re exempt?
Yes, even if directors are exempt from mandatory auto enrolment, they have the option to opt into a workplace pension scheme voluntarily. This allows them to benefit from retirement savings and potential tax advantages associated with pension contributions.
