NIM07061 - Class 1 NICs: Payments made under employment legislation: Earnings period to be used in assessing NICs liability: Payments made under a reinstatement order, a re-engagement order or an order for the continuation of a contract of employment
Regulation 5(a) Social Security (Contributions) Regulations 2001
As mentioned in NIM07060, a payment made under:
- a reinstatement order (see NIM07020 – NIM07021);
- a re-engagement order (see NIM07030 – NIM07031);
- an order for the continuation of a contract of employment (see NIM07040 onwards);
has its own specific earnings period.
The earnings period to be used in assessing the amount of NICs on a payment made under any of the orders mentioned above is the longer of:
- the period to which the sum relates; or
- a week.
Example
Employer A makes a payment under a reinstatement order to employee A. The payment is for the period 6 April 2021 to 31 May 2021 ie, 56 days. As this period is longer than a week, the length of the earnings period is 56 days.
For information on how to calculate the value of the:
- lower earnings limit
- upper earnings limit
- earnings thresholds
for the length of earnings period shown in the above example, see NIM01010.