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Rules and paperwork
First employee in a trade business: the workplace pension duty, 3% from you on earnings between £6,240 and £50,270, worked at £28,000
Your first employee starts a pension duty: 3% from you and 5% from them on earnings between £6,240 and £50,270. Worked at £28,000 and £10,000.
A plumber takes on a first labourer. The plan covers wages, tax and National Insurance and an hour with the accountant. The workplace pension is the part that tends to be missed, and it starts with the first member of staff, not the tenth. This guide puts the minimum into pounds a year so the cost can go into the pricing before the hire.
What GOV.UK says
I read two GOV.UK pages today, one for employers and one on what each party pays.
- Who: staff aged between 22 and State Pension age, who earn at least £10,000 a year and normally work in the UK. The employer must enrol them and pay an employer's contribution.
- When: the duties start "as soon as their first member of staff starts working for them". If a worker becomes eligible later through age or earnings, enrol them and write to them within 6 weeks.
- How much: the minimum is 3% from the employer and 5% from the employee, 8% in all, and the table is headed "From April 2019". The amounts "could be higher" depending on scheme rules.
- On what: earnings between £6,240 and £50,270 a year before tax. The page does not name the tax year those limits apply to.
The sums
Our arithmetic on the page's figures:
| Pay a year | Pension band | Employer 3% | Employee 5% | Total 8% |
|---|---|---|---|---|
| £10,000 | £3,760 | £112.80 | £188.00 | £300.80 |
| £28,000 | £21,760 | £652.80 | £1,088.00 | £1,740.80 |
| £50,270 or more | £44,030 | £1,320.90 | £2,201.50 | £3,522.40 |
A £28,000 labourer therefore costs the firm £652.80 a year in pension on top of the wage, about £54 a month. The employee's 5% comes out of their pay and is not a cost to the firm.
What it means for the first hire
The duty is easy to forget because the first payroll run looks like nothing more than wages and tax. Cover these points before the start date.
AI staff and workflows for trades and building firms. Starting with enquiry to quote.See what we would set up- The cost is on the band, not the whole wage. The first £6,240 is not counted.
- Part-time and young staff. A worker under 22, or earning under £10,000, is not caught by the enrolment rule on the page I read. The page does not set out their other rights, so check before leaving anyone out.
- The choice of scheme. The pages I read do not go into how a scheme is chosen or set up.
Put the pension next to the other first-hire costs in the guide to employer National Insurance and the Employment Allowance. If the hire is an apprentice, the weekly cost is in apprentice minimum wage worked for a trades firm, and the day rate you need to cover it is in the day rate calculator.
I did not read the page on setting up a scheme, the opt-out and re-enrolment rules, the postponement option, or the declaration of compliance to the Pensions Regulator, so those need the full GOV.UK guide.
Overlyft builds AI staff who join your trade business, take each new starter's start date, age and expected pay from the job diary and payroll, work out whether the pension duty applies and what it costs a year, and put a one-line note in front of you before they start.
This is general information, not tax advice. Check GOV.UK and your own figures, or ask your accountant.
Where this comes from: GOV.UK, "Workplace pensions: employers' responsibilities" and "Workplace pensions: what you, your employer and the government pay" (staff aged 22 to State Pension age earning at least £10,000 a year and working in the UK must be enrolled; duties start when the first member of staff starts; minimum contributions from April 2019 are 3% employer, 5% employee, 8% total; earnings counted between £6,240 and £50,270 a year before tax). Read 14 October 2026.
AEO Lookup editorial team
We write practical guides for people who run small UK firms, and we check every fact against its source on the date shown. Read how we review, or tell us if something has changed.
