Auto-enrolment for directors: when a company is exempt

A limited company whose only staff are its directors is usually exempt from auto-enrolment. The Pensions Regulator (TPR) treats a director as a worker only if they have a contract of employment and at least one other person in the company also has one. If the company has no duties, it does not need a pension scheme or a declaration of compliance, but it should tell TPR it is not an employer.

Are directors exempt from auto-enrolment?

Directors are exempt unless two or more people in the company have employment contracts. The tests come from TPR’s guidance on director exemptions:

• a director without a contract of employment cannot be a worker, so is always exempt
• a company with one director and no other staff is never an employer for auto-enrolment
• a director with a contract is exempt if no one else in the company has a contract
• once two or more people have contracts, the company has duties

Being a director is an office, not a job. Many owner-managed companies pay directors a salary through PAYE without a written contract of employment. In that case the director is an office holder, and TPR treats them as outside auto-enrolment.

Which applies to your company?

Use this list to work out your position:

• If no one has a contract, or only one person does, the company is not an employer. Tell TPR using its online form.
• If two or more directors have contracts and there are no other staff, the contracted directors are workers. Directors without contracts are still exempt.
• If you hire anyone who is not a director, the company has full auto-enrolment duties from that person’s first day.

When do duties start?

Duties start on the day the second person with a contract starts work. TPR gives the example of a company with one contracted director and one non-contracted director: the company becomes an employer only when a second contracted worker joins, because one contracted worker alone does not make it an employer.

GOV.UK says an employer’s duties begin when its first member of staff starts, which TPR calls the duties start date. For a director-only company, that is the date the exemption stops applying.

Do you need a declaration of compliance?

A company with no auto-enrolment duties does not need a declaration of compliance. Instead it should use TPR’s “tell us you’re not an employer” form, especially if it has received a TPR letter with a duties start date.

A declaration is needed once duties apply, even if nobody is actually enrolled. For example, if two contracted directors are both eligible but the company chooses not to enrol them, and there are no other eligible staff, it must still declare. The declaration then states that no workers were put into a scheme.

The deadline is within 5 months of the duties start date. You need your PAYE reference and either your letter code or Accounts Office reference.

Can a company choose not to enrol a director?

Yes, where the director is a worker only because of the two-contract rule. TPR says the company can choose whether to enrol an eligible director. Ordinary employees have no such option.

The director keeps the right to opt in or join a scheme at any time, and the employer cannot refuse. The one exception is someone in their notice period whom the employer has excluded.

What are the 2026/27 thresholds?

Once a non-exempt worker is in scope, the standard rules apply. The DWP’s review of 18 December 2025 kept all thresholds for 2026/27 at their 2025/26 levels.

DWP confirmed on 3 November 2026 that the 2027/28 figures will not change. Workers aged 22 to State Pension age who earn over £10,000 must be enrolled. The minimum contribution is 8% of qualifying earnings, with at least 3% from the employer, according to GOV.UK.

For proposals to raise the minimum, see our report on auto-enrolment at 12%.

What if things change?

Tell TPR as soon as possible if your circumstances change. TPR gives two examples: taking on staff who are not directors, or two directors starting work under contracts of employment. From that date, follow the full process in our guide to pension auto-enrolment and see how to take on your first employee.

What to do now

1. Check each director’s paperwork. Find out whether anyone has a written or implied contract of employment.
2. Count contracted people. Two or more means duties.
3. Tell TPR if you are exempt. Use the not-an-employer form and keep a copy.
4. Plan director pensions anyway. Exempt directors can still have the company pay into a pension. See director pension contributions and test the numbers with our pension contributions calculator.

Frequently asked questions

Does a sole director company need a workplace pension?

No. TPR says a one-person company with a single director is never an employer for auto-enrolment, so it has no duties.

Are two directors exempt from auto-enrolment?

They are exempt unless both have contracts of employment. If both have contracts, the company has duties for them, although it can choose not to enrol them.

Does a director-only company need to file a declaration of compliance?

Not if it has no duties. It should tell TPR it is not an employer using TPR’s online form instead.

What happens when a director-only company hires an employee?

The company becomes an employer with auto-enrolment duties from the employee’s first day, and must declare compliance within 5 months.

Can an exempt director still join the company pension?

Yes. A director can opt in or join a scheme at any time, and the company cannot refuse.