What pension rights do freelance workers have?

Paul Ashcroft and Alison Hills examine why The Pensions Regulator is calling on gig economy employers to automatically enrol eligible jobholders into pension schemes

The Pensions Regulator (TPR) has called on all gig economy employers to automatically enrol eligible jobholders into pension schemes. TPR's chief executive, Charles Counsell, has made it clear that it does not wish to handle this issue on a case-by-case basis. 

TPR's call on gig economy employers follows the Supreme Court decision that held Uber drivers are workers and not self-employed. It is now clear that Uber drivers are entitled to certain statutory employment rights including the right to be automatically enrolled in a pension scheme, if they are eligible.  

But when exactly are Uber drivers eligible for auto-enrolment? What issues lie ahead and are there any challenges in assessing pension contributions for gig economy workers? Why is TPR keen that all gig economy employers take steps to auto-enrol their workforce? 

What are the legal obligations to auto-enrol workers?

The Supreme Court judgment on Uber that was handed down earlier this year has paved the way for drivers to benefit from some statutory employment rights –including the right for many to be automatically enrolled in a pension scheme.

TPR has made it clear that employers in the gig economy need to start to recognise that the people who work for them are workers, many of whom should be eligible for auto-enrolment pension provision. TPR has said that auto-enrolment is all about helping people who are working in the economy to have a decent standard of living during their retirement and is encouraging gig economy employers to start enrolling their workers into pension schemes.

Therefore, it is not only a legal obligation to auto-enrol those workers who are eligible jobholders, but also a moral obligation for gig economy employers to engage with auto-enrolment to help their workforce save for their retirement. In any event, all gig economy employers ought to proactively assess their workers' earnings, and where necessary they should set up an automatic enrolment compliant scheme. 

What issues lie ahead? 

Gig economy workers often miss out on auto-enrolment because they tend to have less traditional working patterns such as flexible hours, zero-hour contracts and multiple sources of income. 

This creates practical challenges in assessing whether a worker meets the qualifying earnings trigger and bands for auto-enrolment. The key for many gig economy employers will be in improving the ways in which they record worked hours and pay.

In future it's possible that there might be changes to the auto-enrolment threshold to improve access for those workers where it is currently difficult to meet the eligibility criteria. Some pension providers such as Scottish Widows and Now Pensions have called for the £10,000 earnings trigger to be abandoned. The Secretary of State, however, has kept the existing earnings trigger for 2021/22.

The Department for Work and Pensions is aiming to abolish the lower earnings limit and reduce the age for automatic enrolment in the mid-2020s from age 22 to 18. The upshot is that there are a number of changes on the horizon that are aimed at helping more people save for their retirement and increasing access to auto-enrolment. All employers (whether in the gig economy or otherwise) should keep an eye out for future changes in the law.

What other benefits might be extended to gig economy workers?

In our experience, we have not seen many gig economy employers racing to provide further benefit packages to their workforce since the Supreme Court decision and nor would we expect to see this.

Statutory employment rights are provided on a spectrum with employees benefiting from the best level of protection, workers getting the next best protection, while self-employed individuals are the least protected. There are, however, other advantages to worker and/ or self-employed status, such as the possibility of working for multiple employers and certain tax advantages.  

By bumping Uber drivers from self-employed individuals up to workers, those individuals become entitled to certain statutory rights including holiday pay and national minimum wage. However, there is no automatic legal entitlement to optional and discretionary benefit packages provided by employers such as private healthcare, dentalcare or gym memberships.

One of the principles of becoming a worker is greater protection in terms of discrimination. However, worker status is not a protected characteristic. For the worker to benefit from statutory discrimination protection, they would have to show they are being discriminated against on grounds such as age, sex or disability. In the absence of other complaints, they cannot say they are being discriminated against by virtue of being a worker as opposed to an employee.


It's clear from TPR's comments that gig economy employers need to start recognising their workforce as workers by auto-enrolling eligible jobholders into pension schemes and taking action before the regulatory body does. 

Changes to auto-enrolment legislation are on the horizon so watch this space. Finally, it is incredibly important that every pension saver thinks about the adequacy of their own retirement provision so that they don't risk getting to retirement having not saved anywhere near enough to live comfortably.

Paul Ashcroft and Alison Hills of Wedlake Bell LLP's pensions & employee benefits team