Senior staff at Workchain, a national recruitment agency, impersonated their temporary workers to opt them out of their workplace pension scheme.
According to The Pensions Regulator (TPR), the firm's owners and directors Phil Tong and Adam Hinkley encouraged five senior staff at the company to get the temporary workers out of the scheme, so the company could avoid making pension payments on their behalf.
Financial controller Hannah Armson, HR and compliance officer Lisa Neal and branch managers Martin West, Robert Tomlinson and Andrew Thorpe then worked together to opt workers out of the National Employment Savings Trust (Nest) pension scheme using its online system, the watchdog said.
Derby-based Workchain - formerly known as Smart Recruitment UK -, which has offices in towns and cities across the Midlands and the neighbouring counties, would have been able to avoid paying pension contributions if the offence had not been detected.
The Pensions Regulator prosecuted Workchain, the two directors and five senior staff for an offence of unauthorised access to computer data, contrary to section 1(1) of the Computer Misuse Act 1990.
This is the first time that the watchdog has launched prosecutions for this offence, the regulator revealed.
All of the defendants pleaded guilty to the offence when they appeared for the first time at Derby Magistrates’ Court yesterday (7 June).
District Judge Jonathan Taaffe committed the case to Derby Crown Court for a sentencing hearing on 28 June.
A conviction for computer misuse carries a maximum sentence of six months' imprisonment and/or an unlimited fine in a magistrates’ court, or two years’ imprisonment and/or an unlimited fine if the case is committed to the Crown Court.
This case was the result of an investigation involving The Pensions Regulator, the Employment Agency Standards Inspectorate, Derbyshire Constabulary and Nottinghamshire Constabulary, which was launched after Nest reported its concerns about Workchain to the regulator in May 2014.
According to Darren Ryder, The Pensions Regulator’s director of automatic enrolment, Workchain’s directors saw denying their temporary workers pensions as a quick and easy way to save the company money.
He said: "Both they, and their senior staff, thought nothing of misusing Nest's online portal. Thanks to the vigilance of Nest, their attempt to cheat the automatic enrolment system failed.
“Automatic enrolment is not an option. It is the law and the law is clear - no one can opt a worker out of a pension scheme, even if the worker agrees. Those who try to avoid their pension responsibilities in this way face prosecution.”
The Pensions Regulator has warned that it is increasingly using its compliance and enforcement powers, having issued almost 14,000 penalty notices during the first three months of 2018.
Nathan Long, senior pension analyst at Hargreaves Lansdown, argued that The Pensions Regulator "rightly continues to clamp down on rogue employers who ignore or disobey workplace pension rules”.
He said: “The country's retirement prospects depend on everyone squirreling money away for the future and unscrupulous employers simply cannot be allowed to undermine this vital initiative.
“Employers are responsible for enrolling their staff into pensions, but staff have ultimate responsibility for their financial future.
“This particular case involved treating temporary workers differently to permanent staff, which given more modern, flexible working patterns makes it particularly important.
“Any employers who are not doing their bit should get their house in order quickly, as the regulator once again shows it is not to be crossed.”
maria.espadinha@ft.com
