A new monthly-paid employee starts on 22 November, missing the November payroll run. The earnings for November will be paid with the December salary. How are NICs calculated?

First of all, if it were possible to pay this employee with the November payroll run, the earnings period for NICs would be a month, even though the period being paid is much shorter. The normal earnings period is always used for a new employee where the period between the start date and the first payday is less than the normal earnings period.

Example: A monthly-paid employee starts on 15 November 2004 and is paid at the end of November. NICs are calculated using a monthly-earnings period, even if it is known that the employee is being paid for the first half of the month by the previous employer.

The same principle applies when it is not possible to pay an employee for the earnings period in which the employment starts. If a single payment is being made for a period that is longer than the earnings period, in this case between the employee's starting date and the end of the following pay period, NICs must be calculated separately for the earnings in each earnings period, using the employee's normal monthly earnings period in each case. The employee is entitled to benefit from the "NICs-free" pay for each month - even if the employee also benefits from the "NICs-free" pay for the same earnings period with the previous employer. The deductions must be recorded as separate amounts for each earnings period but may be combined on the payslip.

Example: A weekly-paid employee starts on a Wednesday and is paid for the rest of that week with the pay for the following week. The NICs due on the pay for each week are calculated separately. The details are merged on the payslip.

If this situation occurs over the tax year end, e.g. involving the last earnings period of one year and the first of the next, the NICs calculations for both months are still be calculated separately but the NICs rates and limits that are used are those that apply for the earnings period in which the payment is made. The amounts calculated are recorded as part of the total NICs for the new tax year.

Example: A monthly-paid employee starts on 22 March and is paid for both March and April at the end of April. The NICs are calculated for both months separately, but using the rates and thresholds that apply in the new tax year. The NICs for March are included in the total NICs for the new tax year.

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