NIM07084 - Class 1 NICs: Payments made under employment legislation - Insolvency of employer - Payments made out of the National Insurance Fund - What is and is not earnings for NICs purposes
As explained in NIM07082, the Secretary of State for Business and Trade can make certain specified payments out of the National Insurance Fund. But not all of those payments are earnings within the definition in section 3(1) of the Social Security Contributions and Benefits Act 1992.
In order to decide whether a certain payment should or should not be included in the gross amount of earnings, it is necessary to establish precisely what payments are being made.The following table shows what payments are liable to NICs and which ones are not.
TYPE OF PAYMENT | LIABLE FOR NICs? | GUIDANCE |
|---|---|---|
Arrears of pay including: | Yes | |
guarantee payment | Yes | |
time off payments | Yes | |
medical suspension payment | Yes | |
maternity suspension payment | Yes | |
protective award | Yes | |
Payment in lieu of notice or for failure to give such notice | Yes | |
Holiday pay | Yes | |
Basic award of compensation for unfair dismissal | No | NIM02510 for general guidance on compensation |
Reimbursement of the whole or part of any fee paid by an apprentice or articled clerk | No |
See NIM02010 for general information about the meaning of “earnings”.