A high street footwear firm turned a £400 fine into a bill for more than £40,000 after claiming it was too busy to meet its pension responsibilities.
The case has prompted a fresh warning to employers from the Pensions Regulator (TPR) not to ignore their auto-enrolment duties.
Johnsons Shoes Company was issued with a £400 fixed penalty notice after it failed to comply with the law on the auto-enrolment of its staff into a workplace pension.
The company had been required to check whether its staff qualified to be put into a workplace pension scheme and to confirm to TPR that it had done so.
Johnsons paid the £400 fine but still did not become compliant. Despite repeated reminders – and being warned that it would face a new fine that would increase by £2,500 per day if it did not meet its responsibilities – the Shepperton-based business continued to flout the law.
The fine reached £40,000 before the company finally became compliant. At that point, Johnsons refused to pay the fine – forcing TPR to take the business to court to secure payment.
Eventually Johnsons agreed to pay the £40,000 fine and £2,000 court costs, preventing the need for a full court hearing on the matter.
Charles Counsell, TPR’s executive director of automatic enrolment, said: “The failure by Johnsons to act, despite our repeated warnings, left it with a completely unnecessary bill that was more than 100 times the amount it was originally fined.
“The vast majority of employers meet their automatic enrolment responsibilities. We will use all the powers available to us against the minority who choose to ignore their duties.
“Our message is clear: fail to comply with the law and you may be fined. Fail to pay your fine and we may take you to court.”
Commenting Andrew Cheseldine, partner at Lane Clark & Peacock, said: "The Pensions Regulator is clearly now at a point where it is running out of patience with employers who simply ignore their obligations.
"For most employers – those who do their best to comply – this is good news because it creates a more level playing field with other employers who seek an unfair competitive advantage by non-compliance.
"Even if you fail to comply fully, if you are open and are trying to comply and look after employees’ interests, it is likely that the Regulator will work with you (typically issuing a compliance notice) rather than immediately reaching for a stick to beat you with."
Nathan Long of Hargreaves Lansdown, added: "The firm’s claims that they did not have time to comply doubtless echo with the feelings of many small business owners across the UK, but the Pensions Regulator’s stance is necessarily tough.
"To solve our pension saving crisis, all employers must be forced to have a correctly functioning workplace pension scheme, which means making room among all the other pressures of managing a business for proper planning.