NIM09150 - Earnings Periods: Holiday pay paid in advance: employee stays at work & takes holiday later

Regulation 2 of the Social Security (Contributions) Regulations 2001 (SSCR 2001) (SI 2001 No 1004)

If a weekly paid employee does not take their holiday until some time after getting paid for it then the employer calculates the NICs on the pay at the time it is paid. For example, a member of the maintenance staff who gets their holiday pay before the firm’s annual close-down period but they remain at work and are expected to take their holiday later.

‘Regular Interval’ Rule (Method A) Used

If the employer used these rules, NICs are due on each week’s pay separately ie for the holiday pay and the normal weekly pay.

‘Holiday Earnings Period’ Rules (Method B) Used

If the employer used these rules then, for example:

• a three weekly NIC is due on three weeks pay received before a fortnight’s general closedown and
• separate weekly NICs are due on the earnings during the closedown.