You can establish the SEP IRA, even if the employee refuses to participant. However, you would need to establish an IRA for the employee, assuming he or she is eligible, and deposit his or her contribution to the account. You would first need to check with the financial institution to determine whether it would be willing to establish the account with your signature, rather than the participant's.
You may also want to notify the employee in writing when the account is established and funded.
For more insight on SEPs, check out Plans The Small Business Owner Can Establish.
Question answered by Denise Appleby, CISP, CRC, CRPS, CRSP, APA