Pensions Bill

moved Amendment No. 65: 65: After Clause 87, insert the following new Clause— ““Directors (1) A person who holds office as a director of a company is not, by virtue of that office or of any employment by the company, a worker for the purposes of this Part, unless— (a) the person is employed by the company under a contract of employment, and (b) there is at least one other person who is employed by the company under a contract of employment. (2) In this section, ““company”” includes any body corporate.”” The noble Lord said: My Lords, noble Lords may recall the debate in Committee about the impact of the employer duty provisions in the Bill on non-executive directors. That debate was instigated by an amendment tabled by the noble Baroness, Lady Noakes, who raised an interesting issue about whether non-executive directors were exempt from being automatically enrolled. We do not want to change the current market practice in relation to directors and have always considered non-executive directors to be outside the scope of these reforms. However, following further consideration and discussions with the noble Baroness, Amendment No. 65 is designed to avoid doubt by ensuring that a director with a contract of employment is included in the reforms, and a director with any other contract or letter is excluded. This would mean that unless a non-executive director has a contract of employment, they will not be automatically enrolled. Ultimately, if there is any ambiguity in a non-executive director’s contract about their employment status, then a decision about whether they should be enrolled will have to be made on an individual basis. Any uncertainty about employment status will have to be resolved by looking at the contract and possibly the factual background of how the document came into existence, the intention of the parties and how the relationship operated. Amendment No. 65 also acts as a technical amendment to remove an anomaly in respect of sole worker-directors. Worker-directors pay themselves as a worker for their own company. Sometimes, they may be the sole worker in the company. In such cases, the Bill could create a situation where worker-directors would be required automatically to enrol themselves into pension saving and could then choose whether to opt out. Applying the duties in such cases would place unnecessary administrative burden on the worker-director, their scheme and the regulator. I hope that these measures have addressed the concerns raised by the noble Baroness. I thank her for her engagement and help on this matter. I beg to move.