Recruiter hit with £280k fine for escaping pension duties

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Recruiter hit with £280k fine for escaping pension duties

National recruitment agency Workchain, its directors and senior staff have been ordered to pay more than £280,000 for plotting to illegally opt workers out of their pension scheme.

The sentencing, delivered on Friday (October 26) at Derby Crown Court, is the largest fine and first custodial sentences for a case brought by The Pensions Regulator (TPR).

According to the regulator, 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.

However, after Nest became suspicious about a number of the calls from Workchain, the regulator examined recordings of the conversations.

These captured the moments the defendants secured the Nest ID numbers of multiple workers.

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 was the first time that the watchdog launched prosecutions for this offence, the regulator said.

All of the defendants pleaded guilty to the offence when they appeared for the first time at Derby Magistrates’ Court in June.

At the sentencing hearing, Judge Nirmal Shant told the defendants their "co-ordinated effort" had been an "attempt to steal a march" on their competitors.

She said: "This amounted to a deliberate subversion of the automatic enrolment process. It was a deliberate attack on the integrity of the electronic systems of Nest."

Judge Shant ordered Workchain to pay a £200,000 fine and £60,930 in costs.

Tong and Hinkley were each given a four-month prison sentence suspended for two years and were ordered to complete 200 hours of community service, and to pay £11,250 costs.

Armson was given a two-month prison sentence suspended for two years, a five-month overnight curfew, and was ordered to pay £1,500 costs.

Neal was given a two-month prison sentence suspended for two years, and was ordered to do 200 hours of community service and to pay £1500 costs.

West, Tomlinson and Thorpe were each given a two-year community order and were ordered to do 150 hours of community service, and to pay £500 costs.

According to Darren Ryder, director of automatic enrolment at The Pensions Regulator, the scale of the punishments handed down shows the court agreed that these were very serious offences. 

He said: "Automatic enrolment has led to almost 10 million more people saving towards their retirement.

"Its success cannot be allowed to be undermined by such incredibly rare cases of unacceptable behaviour as that of Workchain.

"Nest's vigilance, our thorough investigation and the sentences from the court have led to a clear message - employers cannot 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 receiving heavy fines and criminal records."

maria.espadinha@ft.com