NIM09540 | Earnings periods: notifications issued in accordance with regulation 3(2B), SS(C)R 2001: change of pay practice

Regulation 3(2B) of the Social Security (Contributions) Regulations 2001 (SSCR 2001) (SI 2001 No 1004)

An employer may change the way in which an earner is paid after a notification under regulation 3(2B) has been issued. The employer or the employee may ask for the notification to be withdrawn. Whilst the amounts of earnings paid at each pay interval may change in relation to each other, a notification is still appropriate unless the underlying pay practice changes, ie the greater part of the earnings is no longer normally paid at the longer interval. If a pay practice changes it is up to the employer or employee to ask about changing or ending the earnings period laid down by the notification.

Regulation 3(2B) provides that HMRC can tell the employer what the earnings period should be if it is satisfied that the greater part of the earnings is normally paid at the longer of the intervals. This can mean that the majority of an employee’s earnings are usually, but not necessarily always, paid at the longer interval. Therefore a notification does not become void simply because of an occasional change in the pay practice or any change to the pay practice made part way through the tax year. Changes such as this are not enough to undermine the pattern, or ‘norm’, established at the time the notification was considered.

Find out if the changes mean that the conditions under which the notification was originally issued still exist. If they do, tell the employer why and confirm that the notification still applies.

If it is found that most of the employee’s earnings are no longer paid at the longer of the two or more regular intervals or the employer is changing the amounts involved with the new pay practice so that the conditions of regulation 3(2B) are no longer satisfied - see NIM09541.