Usually not. The Pensions Regulator treats a director as a worker for automatic enrolment only if the director has a contract of employment with the company and at least one other person also works for it under a contract of employment, so a director with no employment contract is always outside the duties. A company still has duties for any staff who are not directors, and for directors once two or more people hold employment contracts, although it may choose not to enrol those directors.
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Why does a director without an employment contract fall outside the duties?
Because the duties attach to workers, and holding office as a director does not make someone a worker. Section 88 of the Pensions Act 2008 defines a worker as an individual who has entered into or works under a contract of employment or another contract to perform work or services personally. A director who simply holds office, and is paid fees, salary or dividends without any contract of service, is an office holder rather than a worker.
The Pensions Regulator’s guidance on director exemptions puts it directly: if a director does not have an employment contract, they cannot be a worker and are always exempt from automatic enrolment. A company whose only people are directors without employment contracts is not an employer for these purposes, has no automatic enrolment duties and does not complete a declaration of compliance.
Being on the payroll does not change this. A director can be an office holder for PAYE and National Insurance without having a contract of employment. The difference is explained in is a director an employee.
Who counts as a director?
The Regulator means anyone holding office as a director, which includes a director formally appointed under the Companies Act 2006 and anyone acting as a director with a decision making role in the company’s governance, even if not properly appointed. It does not include someone who is a director in name only.
What if there is no written contract?
A contract of employment can be written, verbal or implied. However, the Regulator says that if there is no written contract, or other evidence of an intention to create an employment relationship between the company and its directors, it will not seek to argue that an implied contract exists.
What if the director does have an employment contract?
A director with an employment contract is still exempt if they are the only person in the company with one. The Regulator says a one person company consisting of a single director is never an employer under automatic enrolment, whether or not the director has an employment contract, and this remains true if there are other directors, provided none of them works under an employment contract.
The exemption ends when a second person holds an employment contract. Where a company has several directors and no other staff, and at least two directors have employment contracts, every director with a contract becomes a worker and the duties apply to them. Directors without contracts remain outside.
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Does the company have to enrol a director who is a worker?
No, but it still has duties. Regulation 5EA of the Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010 applies to a jobholder who holds office as a director of the company employing them, and reads the duty to enrol and re enrol as “may” rather than “must”. So the company can choose whether to put an eligible director into a scheme.
The Regulator adds three conditions to that choice:
- the company must still complete a declaration of compliance, even if it decides not to enrol anyone;
- the director keeps the right to opt in or ask to join a scheme at any time, and if they do, the company cannot refuse;
- if the only eligible workers are employed directors and the company chooses not to enrol them, it does not need to set up a scheme, but it does need to declare.
The age and earnings criteria are the normal ones. For 2026 to 2027 the Regulator gives them as aged 22 up to State Pension age and earning over £10,000 a year, £833 a month or £192 a week.
When must a director run company enrol other staff?
As soon as it takes on anyone who is not a director and works under an employment contract. The Regulator says the duties start when you employ your first member of staff who is not a director and has an employment contract. From that point:
- non director staff who meet the age and earnings criteria must be enrolled;
- if none of them meets the criteria, the company is still an employer and must complete a declaration of compliance;
- any director with an employment contract now becomes a worker too, because there are at least two people with contracts, although regulation 5EA lets the company choose whether to enrol them.
The Regulator notes a timing point for companies that had two directors, one with a contract and one without. When such a company hires its first employee, the duties are given effect from the date that new worker started, not from the date the contracted director began. The full employer duties are covered in workplace pension auto enrolment: employer duties.
Are there special rules for married couples?
No. The Regulator says there are no special rules for directors who are married or in a civil partnership, because the duties are not affected by family relationships. If both spouses are directors and both have employment contracts, the company has duties for both. If only one has a contract, or neither does, neither is a worker. If one is a director and the other is not, and both have contracts, the company has duties for the non director and also for the director, though it may choose not to enrol the director. Paying a spouse through payroll for real work can make sense for tax, but it often creates the first set of duties; see can my company pay into my spouse’s pension.
What about company secretaries and other office holders?
The special director rules do not extend to them. The Regulator says a company secretary or trustee is a worker if they have an employment contract with the organisation, and exempt if they have none and only perform the duties of their office. Where a contract covers only part of what they do, such as extra administration beyond the formal secretarial duties, only the income under the contract counts for automatic enrolment.
How does this work in practice?
Illustration only.
| Company | Duties? |
|---|---|
| One director, paid a small salary and dividends, no employment contract | No. Not an employer. |
| One director with an employment contract, no other staff | No. A sole director is never a worker. |
| Two directors, one with a contract and one without | No. Only one person has a contract. |
| Two directors, both with contracts | Yes, for both. The company may choose not to enrol them, but must declare. |
| One director without a contract and a part time employee earning £8,000 a year | Yes. The employee is below the £10,000 trigger, so need not be auto enrolled, but the company must declare and deal with any request to join. |
What paperwork does a company without duties need?
None by default. The Regulator says a company in this position only needs to complete its online form to tell it you are not an employer if it has received a letter from the Regulator. If circumstances change, for example a non director is hired or a second director signs an employment contract, the company must tell the Regulator as soon as possible. The sole director payroll page covers the PAYE side of the same decision.
What mistakes do directors make?
- Assuming payroll means duties. Running PAYE for a director does not by itself make the company an employer for automatic enrolment.
- Issuing employment contracts without checking. Giving two directors written service contracts brings both within the duties.
- Forgetting the declaration. A company that has duties must declare even if it enrols nobody.
- Refusing an opt in request. An employed director who asks to join must be enrolled.
- Overlooking a spouse or family member. A relative who works under an employment contract and is not a director is treated like any other member of staff.
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Related Accountapedia entries
- Qualifying earnings for auto enrolment contributions
- Workplace pension auto enrolment: employer duties
- Opting out of auto enrolment: refunds and tax
- Auto enrolment re enrolment every three years
- How many directors does a company need
Related cover: Directors and officers liability insurance and Management liability insurance.
Sources
- legislation.gov.uk: Act 2008 c. 30, section 88
- The Pensions Regulator: Director exemptions from automatic enrolment
- legislation.gov.uk: SI 2010/772, regulation 5EA
- The Pensions Regulator: Directors and automatic enrolment do you have duties
- The Pensions Regulator: Were a family business do automatic enrolment duties apply to us
- The Pensions Regulator: Earnings thresholds
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.