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A technical overview of the regulations

Published 27 January 2022

Applies to England, Scotland and Wales

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This publication is available at https://www.gov.uk/government/consultations/draft-legislation-the-social-security-contributions-freeports-regulations-2022/a-technical-overview-of-the-regulations

This is an overview of the regulations required to exempt freeport employees from the requirement to spend 60% of their working time in a Freeport tax site if adjustments to their working patterns have been made because of the following protected characteristics: disability, maternity and pregnancy.

Clause 2(1)(d) of the National Insurance contributions (NICs) Bill (in session 2021 to 2022) requires an employee to spend 60% or more of their employed time (defined by subsection 4(a)) in a single Freeport Tax Site in which the Freeport employer must also have business premises.

The Social Security Contributions (Freeports) Regulations 2022 will exempt employees from having to meet the freeport condition at Clause 2(1)(d) if an employer has made an adjustment to their working pattern as a result of the following protected characteristics: disability, maternity and pregnancy. These regulations will reference the Equality Act 20210 to define these characteristics.

The Social Security Contributions (Freeports) Regulations 2022

  1. Regulation 1 specifies that these regulations will take effect from 6 April 2022.

  2. Regulation 2 explains that the freeport condition in section 2(1)(d) – the requirement that Freeport employees spend 60% of their working time in the Freeport tax site - is treated as being met if an employment meets the conditions in regulation 3 or 4.

  3. Regulation 3 states that employees that are disabled, by reference to section 6(1) of the Equality Act 2010, will qualify for this exemption if an employer or secondary contributor has made an adjustment to their working pattern because of that disability and, had it not been for that disability, the employee would have spent 60% of their working time in the Freeport tax site.

  4. Regulation 4(1) states the employees who are working (i.e. not on any form of leave) and are either pregnant or are within the period of maternity, will qualify for this exemption if an employer has made an adjustment to their working pattern because they are pregnant or fall within the period of maternity and, had it not been for that, the employee would have spent 60% of their working time in the Freeport tax site.

  5. Regulation 4(2)(a) clarifies that pregnancy includes any time that the employee has suffered an illness as a result of that pregnancy. This is consistent with the approach taken in the Equality Act 2010.

  6. Regulation 4(2)(a) specifies the period of maternity as 26 weeks from the day of birth. Regulation 4(2)(c) states that the definition of ‘day of birth’ is the same as that in section 17(5) of the Equality Act 2010. It is worth noting, that there is a definition of maternity at section 18 of the Equality Act 2010 that defines maternity as the period of maternity leave (which can be up to 52 week or as long as their employer allows).

However, given that clause 2(4)(b) of the NICs Bill (in session 2021 to 2022) already excludes periods of leave from the calculation of the 60% rule, these draft regulations refer to section 17 of the Equalities Act 2010 as it provides greater protection when an individual returns to work.

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