NIM01576 - Class 1 Structural Overview: zero-rate of secondary NICs for Freeport employees: examples: Example 6 – Substantial change in employee’s working arrangements due to reduction in hours and redistribution of duties

Example 6 – Substantial change in employee’s working arrangements due to reduction in hours and redistribution of duties

An employee starts work for an employer and the conditions for the relief are met at the start of the employee’s employment. The employer claims the relief.

The employer reasonably expects that the employee will work at the Freeport business premises for 30 hours (75% of the employee’s working time) and 10 hours (25% of the employee’s working time) transporting goods from a customer’s premises 50 miles away to the Freeport site. The 60% condition is met. In the first 6 months of the employee’s employment, the employee never works different working time and location arrangements.

However, after 6 months the employer and the employee agree to permanently reduce the employee’s working hours and change duties so the employee will now work 10 hours on site in the Freeport business premises (50% of the employee’s working time) and 10 hours transporting goods from a customer’s premises (50% of the employee’s working time). This is a substantial change in the earner’s working arrangements. The 60% condition is no longer met after the substantial change, so the employer cannot claim the relief after the substantial change.