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

»Ê¹ÚÌåÓýapp employer may use the ‘holiday earnings period â€� rule (or “Method Bâ€�) if their payroll arrangements mean they cannot prepare several separate weekly payrolls in a single week. »Ê¹ÚÌåÓýapp employer decides which method of calculation to use â€� either ‘holiday earnings periodâ€� rule or ‘regular intervalâ€� rule (see NIM09120).

Methodology

»Ê¹ÚÌåÓýapp employer divides the total payment by the number of complete weeks it covers to get the average weekly pay and multiplies the NICs due on the average weekly pay by the number of weeks involved to give the total NICs due. »Ê¹ÚÌåÓýapp employer must use the rates, limits and brackets current on the date of payment of earnings, even if the rates, limits and brackets change during the holiday period.

»Ê¹ÚÌåÓýapp employer can only use the ‘holiday earnings periodâ€� method for employees with an earnings period of a week or multiples of a week. »Ê¹ÚÌåÓýappy cannot use this method for monthly paid employees or those employees who have an irregular pay period.

If holiday pay is for less than a complete number of weeks, the employer rounds up fractions of a week eg if an employee gets 10 days pay, the employer calculates NICs on an earnings period of two weeks.

»Ê¹ÚÌåÓýapp employer cannot use the ‘holiday earnings periodâ€� method if the holiday pay is from a scheme in the construction or similar industry.