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HMRC internal manual

Statutory Payments Manual

From
HM Revenue & Customs
Updated
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Average Weekly Earnings (AWE) - SSP: calculating AWE

Employee paid weekly

To work out AWE

  1. Note the first day of the PIW
  2. Find the date of the last normal pay day before the first day of the employee was sick. This is the last day of the relevant period.
  3. Count back to the payday at least eight weeks from the date in 2 and come forward one day. This is the first day of the relevant period 
  4. Add together the earnings paid between the dates 3 and 2 (inclusive).
  5. Divide the figure in 4 by the number of whole weeks in the relevant period (Do not round up or down to whole pence)

Employee paid in multiples of a week

If an employee is paid in multiples of a week, for example, fortnightly, three weekly, four or five weekly:

  1. add together the gross earnings in the relevant period
  2. divide the total earnings by the number of weeks in the relevant period to give the AWE. Include each week in the relevant period, even if there were no earnings in a particular week.

Employee paid monthly

To work out the AWE for employee’s paid calendar monthly.

  1. Find the date of the last normal pay day before the first day your employee was sick. This is the last day of the relevant period. 
  2. Count back to the payday at least eight weeks from date 1 and come forward one day. This is the first day of the relevant period 
  3. Add together all the earnings paid between the dates in 2 and 1 (inclusive).
  4. Work out how many whole months there are between 1 and 2 
  5. Divide the figure in 3 by the number of whole months in 4 
  6. Multiply the figure in 5 by 12.
  7. Divide the figure in 6 by 52 (Do not round up or down to whole pence, use the unrounded figure to decide if the employee’s AWE are high enough).

Employee paid annually

An employee may have an annual pay period for NICs if they:

  • are paid once a year
  • receive a significant proportion of their earnings as an annual bonus or comparatively large commission payments
  • are a director, or
  • are paid in the same way as a director.

Even if they receive an advance on their salary or directors’ drawings from a loan account throughout the year, the pay days when NICs liability arises are used to work out the relevant period and AWE.

For directors drawing in anticipation of a vote, this means that the drawings are not counted as any NICs paid on them is optional and liability only arises at the time of the vote.

To work out average weekly earnings for an employee or director paid annually or by formal vote

Note the first day of the PIW

  1. Find the date of the last vote before the first day the director is sick. This is the last day of the relevant period 
  2. Find the date of the vote before the date in 1 and come forward one day. This is the first day of the relevant period. 
  3. Add together the money voted between the dates in 2 and 1 (inclusive). (Do not include any money drawn in anticipation of the vote)
  4. Work out how many whole months there are between the dates 2 and 1 (inclusive) if there are not a whole number of months see SPM170400 
  5. Divide the figure in 3 by the number of whole months in 4
  6. Multiply the figure in 5 by 12
  7. Divide the figure in 6 by 52 (Do not round up or down to whole pence)