Pension Auto-Enrolment: What Every UK Employer Needs to Know
Auto-enrolment isn't optional. The qualifying earnings band, minimum contributions, and how to handle opt-outs — what every UK employer with even one employee needs to get right.
Since 2012 every UK employer has been legally required to enrol eligible staff into a workplace pension scheme and contribute on their behalf. The rules apply from your very first employee — there is no exemption for small employers.
Who is eligible
You must auto-enrol any worker aged between 22 and State Pension age who earns more than £10,000 a year and ordinarily works in the UK. Workers aged 16–74 who do not meet the age or earnings criteria can opt in voluntarily, and you must contribute for them too if they earn above the lower qualifying earnings threshold.
Qualifying earnings (2025/26)
Contributions are calculated on a band of earnings: above £6,240 and up to £50,270 a year (for monthly payroll: £520–£4,189). Earnings outside that band are not subject to auto-enrolment minimums. Some employers use a different basis (such as total earnings or basic pay) which usually means higher contributions but simpler payroll.
Minimum contribution split
The legal minimum is 8% of qualifying earnings — at least 3% from the employer and the rest (typically 5%) from the employee. Many schemes voluntarily contribute more. Tax relief on the employee contribution is given in one of two ways: net pay arrangement (relief at the employee's marginal rate, applied before tax is calculated), or relief at source (basic-rate relief is added to the pension fund and higher-rate taxpayers claim the rest via Self Assessment).
Opting out
An employee can opt out within one month of being enrolled and get any contributions refunded. After that, they can stop contributions but the money stays in the pension fund. You must re-enrol any opted-out employee every three years, on a date you choose within a six-month window — and tell The Pensions Regulator you've done it.
How payslips reflect this
A payslip should show the employee pension deduction this period and (usually) the year-to-date total. Employer contributions are not deducted from pay so they don't need to appear on the payslip, but most employers show them for transparency. The payslipmaker.uk Payslip Generator includes both as a default.