The Social Security Benefit (Computation of Earnings) Regulations 1996

PART II E+W+S EMPLOYED EARNERS

Calculation of earnings of employed earners E+W+S

6.—(1) Earnings derived from employment as an employed earner shall be calculated or estimated over a period determined in accordance with the following paragraphs and at a weekly amount determined in accordance with regulation 8 (calculation of weekly amount of earnings).

(2) Subject to paragraphs (3) and (5) to (8), the period over which a payment is to be taken into account—

(a) in a case where it is payable in respect of a period, shall be a period equal to a benefit week or such number of benefit weeks as comprise the period commencing on the date on which earnings are treated as paid under regulation 7 (date on which earnings are treated as paid) and ending on the day before the date on which earnings of the same kind (excluding earnings of the kind mentioned at regulation 9(1)(a) to (j)) and from the same source would, or would if the employment was continuing, next be treated as paid under that regulation;

(b) in any other case, shall be a period equal to such number of weeks as is equal to the number (less any fraction of a whole number) calculated in accordance with the formula—

where—P is the net earnings;

Q is the amount of the relevant earnings limit plus one penny; and

R is the total of the sums which would fall to be disregarded or deducted as appropriate under regulation 10(2) or (3) (calculation of net earnings of employed earners),

and that period shall begin on the date on which the payment is treated as paid under regulation 7 (date on which earnings are treated as paid).

(3) Where earnings not of the same kind are derived from the same source and the periods in respect of which those earnings would, but for this paragraph, fall to be taken into account overlap, wholly or partly, those earnings shall be taken into account over a period—

(a) equal to the aggregate length of those periods, and

(b) beginning with the earliest date on which any part of those earnings would otherwise be treated as paid under regulation 7 (date on which earnings are treated as paid).

(4) In a case to which paragraph (3) applies, earnings under regulation 9 (earnings of employed earners) shall be taken into account in the following order of priority—

(a) earnings normally derived from the employment;

(b) any payment to which paragraph (1)(b) or (c) of that regulation applies;

(c) any payment to which paragraph (1)(i) of that regulation applies;

(d) any payment to which paragraph (1)(d) of that regulation applies.

(5) Where earnings to which regulation 9(1)(b) to (d) (earnings of employed earners) applies are paid in respect of part of a day, those earnings shall be taken into account over a period equal to a week.

(6) Where earnings to which regulation 9(1)(i)(i) (earnings of employed earners) applies are paid in respect of or on the termination of any employment which is not part-time employment, the period over which they are to be taken into account shall be—

(a) a period equal to such number of weeks as is equal to the number (less any fraction of a whole number) obtained by dividing the net earnings by the maximum weekly amount which, on the date on which the payment of earnings is made, is specified in section 227(1) of the Employment Rights Act 1996 M1 ; or

(b) a period equal to the length of the specified period, whichever is the shorter, and that period shall begin on the date on which the payment is treated as paid under regulation 7 (date on which earnings are treated as paid).

(7) Any earnings to which regulation 9(1)(i)(ii) applies which are paid in respect of or on the termination of part-time employment, shall be taken into account over a period equal to one week.

(8) In this regulation—

“part-time employment" means—

(a) subject to the provisions of sub-paragraphs (b) to (d) of this definition, employment in which a person is engaged, or, where his hours of work fluctuate, he is engaged on average, for less than 16 hours a week being work for which payment is made or which is done in expectation of payment;

(b) subject to sub-paragraph (c) of this definition, the number of hours for which a person is engaged in work shall be determined—

(i) where no recognisable cycle has been established in respect of a person’s work, by reference to the number of hours or, where those hours are likely to fluctuate, the average of the hours, which he is expected to work in a week;

(ii) where the number of hours for which he is engaged fluctuate, by reference to the average of hours worked over—

(aa) if there is a recognisable cycle of work, the period of one complete cycle (including, where the cycle involves periods in which the person does not work, those periods but disregarding any other absences);

(bb) in any other case, the period of five weeks immediately before the date of claim or the date [F1 of review [F1 on which a revision or supersession of a decision falls to be made]], or such other length of time as may, in the particular case, enable the person’s average hours of work to be determined more accurately;

(c) where for the purpose of sub-paragraph (b)(ii)(aa) of this definition, a person’s recognisable cycle of work at a school, other educational establishment or other place of employment is one year and includes periods of school holidays or similar vacations during which he does not work, those periods and any other periods not forming part of such holidays or vacations during which he is not required to work shall be disregarded in establishing the average hours for which he is engaged in work;

(d) for the purposes of sub-paragraphs (a) and (b) of this definition, in determining the number of hours for which a person is engaged in work, that number shall include any time allowed to that person by his employer for a meal or for refreshment, but only where that person is, or expects to be, paid earnings in respect of that time;

“specified period" means a period equal to—

(a) a week or such number of weeks (less any fraction of a whole number) as comprise the period of notice which is applicable to a person, or would have been applicable if it had not been waived; less

(b) any part of that period during which the person has continued to work in the employment in question or in respect of which he has received a payment to which regulation 9(1)(c) applies,

and for the purposes of this definition “period of notice" means the period of notice of termination of employment to which a person is entitled by statute or by contract, whichever is the longer, or, if he is not entitled to such notice, the period of notice which is customary in the employment in question.

Textual Amendments

F1 Word in reg. 6(8) substituted (29.11.1999) by S.I. 1999/3178, art. 3(16), Sch. 16

Marginal Citations

M1 1996 c.18 .

Date on which earnings are treated as paid E+W+S

7.  Earnings to which regulation 6 (calculation of earnings of employed earners) or 11(2) (calculation of earnings of self-employed earners) applies shall be treated as paid—

(a) (i) in the case of a payment in respect of an adult dependant of an increase of maternity allowance payable under section 82(2) of the Contributions and Benefits Act M2 or an increase of [F2 carer’s allowance] payable under paragraph 7 of Schedule 2 to the Social Security Benefit (Dependency) Regulations 1977 M3 ; or

(ii) in the case of a payment in respect of an adult dependant who is not residing with the claimant of an increase of Category A or Category C retirement pension payable under section 83(2)(b) M4 or 84(1) M5 and 84(2)(b) of the Contributions and Benefits Act M6 or a disablement pension where the claimant is entitled to an unemployability supplement payable under paragraph 6(1)(a)(ii) of Schedule 7 to the Contributions and Benefits Act,

on the first day of the benefit week following the benefit week in which the payment is due to be paid;

(b) in any other case, on the first day of the benefit week in which the payment is due to be paid.

Textual Amendments

F2 Words in Sch. 3 substituted (1.4.2003) by Social Security Benefit (Computation of Earnings) (Amendment) Regulations 2002 (S.I. 2002/2823), regs. 1(b), 2(4), (5)(c)

Marginal Citations

M2 Section 82(2) was substituted by the Jobseekers Act 1995 (c.18), section 41, Schedule 2, paragraph 24.

M3 S.I. 1977/343, amended by the Social Security Act 1986 (c.50), section 37(2), S.I. 1987/355 and 1988/554.

M4 Section 83 was amended by the Social Security (Incapacity for Work) Act 1994 (c.18), Schedule 1, paragraph 20 and Schedule 2.

M5 Section 84 was substituted by the Jobseekers Act 1995, Schedule 2, paragraph 25.

M6 Sections 83 and 84 are to be replaced by section 83A by virtue of the Pensions Act 1995 (c.26), Schedule 4, paragraph 2(1) from 6th April 2010.

Calculation of weekly amount of earnings E+W+S

8.—(1) For the purposes of regulation 6 (calculation of earnings of employed earners), subject to paragraphs (2) to (4), where the period in respect of which a payment is made—

(a) does not exceed a week, the weekly amount shall be the amount of that payment;

(b) exceeds a week, the weekly amount shall be determined—

(i) in a case where that period is a month, by multiplying the amount of that payment by 12 and dividing the product by 52;

(ii) in a case where that period is three months, by multiplying the amount of the payment by 4 and dividing the product by 52;

(iii) in a case where that period is a year, by dividing the amount of the payment by 52;

(iv) in any other case, by multiplying the amount of the payment by 7 and dividing the product by the number equal to the number of days in the period in respect of which it is made.

(2) Where a payment of earnings from a particular source is or has been paid regularly and that payment falls to be taken into account in the same benefit week as a payment of the same kind and from the same source, the amount of those earnings to be taken into account in any one benefit week shall not exceed the weekly amount determined under paragraph (1)(a) or (b), as the case may be, of the payment which under regulation 7 (date on which earnings are treated as paid) is treated as paid first.

(3) Where the amount of the claimant’s net earnings fluctuates and has changed more than once, or a claimant’s regular pattern of work is such that he does not work every week, the application of the foregoing paragraphs may be modified so that the weekly amount of his earnings is determined by reference to his average weekly earnings—

(a) if there is a recognisable cycle of work, over the period of one complete cycle (including, where the cycle involves periods in which the claimant does no work, those periods but disregarding any other absences);

(b) in any other case, over a period of five weeks or such other period as may, in the particular case, enable the claimant’s average weekly earnings to be determined more accurately.

(4) Where any payment of earnings is taken into account under paragraph (7) of regulation 6 (calculation of earnings of employed earners), over the period specified in that paragraph, the amount to be taken into account shall be equal to the amount of the payment.

Earnings of employed earners E+W+S

9.—(1) Subject to paragraphs (2) and (3), “earnings", in the case of employment as an employed earner, means any remuneration or profit derived from that employment and includes—

(a) any bonus or commission;

(b) any payment in lieu of remuneration except any periodic sum paid to a claimant on account of the termination of his employment by reason of redundancy;

(c) any payment in lieu of notice;

(d) any holiday pay except any payable more than four weeks after the termination or interruption of employment;

(e) any payment by way of a retainer;

(f) any payment made by the claimant’s employer in respect of expenses not wholly, exclusively and necessarily incurred in the performance of the duties of the employment, including any payment made by the claimant’s employer in respect of—

(i) travelling expenses incurred by the claimant between his home and place of employment;

(ii) expenses incurred by the claimant under arrangements made for the care of a member of his family owing to the claimant’s absence from home;

(g) any award of compensation made under section 112(4) or 117(3)(a) of the Employment Rights Act 1996 M7 (remedies and compensation);

(h) any such sum as is referred to in section 112(3) of the Contributions and Benefits Act (certain sums to be earnings for social security purposes);

(i) where—

(i) a payment of compensation is made in respect of employment which is not part-time employment and that payment is not less than the maximum weekly amount, the amount of the compensation less the deductible remainder, where that is applicable;

(ii) a payment of compensation is made in respect of employment which is part-time employment, the amount of the compensation;

[F3 (j) any remuneration paid by or on behalf of an employer to the claimant in respect of a period throughout which the claimant is—

(i) on maternity leave;

(ii) on paternity leave;

(iii) on adoption leave; or

(iv) absent from work because he is ill.]

(2) For the purposes of paragraph (1)(i)(i) the “deductible remainder"—

(a) applies in cases where dividing the amount of the compensation by the maximum weekly amount produces a whole number plus a fraction; and

(b) is equal to the difference between—

(i) the amount of the compensation; and

(ii) the product of the maximum weekly amount multiplied by the whole number.

[F4 (3) “Earnings” shall not include any payment in respect of expenses—

(a) wholly, exclusively and necessarily incurred in the performance of the duties of the employment; or

(b) arising out of the [F5 claimant participating as a service user].]

[F6 (3A) The reference in paragraph (3)(b) to a claimant participating as a service user is to—

(a) a person who is being consulted by or on behalf of—

(i) a body which has a statutory duty to provide services in the field of health, social care or social housing; or

(ii) a body which conducts research or undertakes monitoring for the purpose of planning or improving such services,

in their capacity as a user, potential user, carer of a user or person otherwise affected by the provision of those services;

(b) a person who is being consulted by or on behalf of—

(i) the Secretary of State in relation to any of his functions in the field of social security or child support or under section 2 of the Employment and Training Act 1973; or

(ii) a body which conducts research or undertakes monitoring for the purpose of planning or improving such functions,

in their capacity as a person affected or potentially affected by the exercise of those functions or the carer of such a person; or

(c) the carer of a person consulted under sub-paragraphs (a) or (b).]

(4) In this regulation—

“compensation" means any payment made in respect of or on the termination of employment in a case where a person has not received or received only part of a payment in lieu of notice due or which would have been due to him had he not waived his right to receive it, other than—

(a) any payment specified in paragraph (1)(a) to (h);

(b) any payment specified in paragraph (3);

(c) any redundancy payment within the meaning of section 135 of the Employment Rights Act 1996;

(d) any refund of contributions to which that person was entitled under an occupational pension scheme;

(e) any compensation payable by virtue of section 173 or section 178(3) or (4) of the Education Reform Act 1988 M8 ;

[F7 “adoption leave” means a period of absence from work on ordinary or additional adoption leave under section 75A or 75B of the Employment Rights Act 1996;]

[F8 “enactment” includes an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament;]

[F7 “maternity leave” means a period during which a woman is absent from work because she is pregnant or has given birth to a child, and at the end of which she has a right to return to work either under the terms of her contract of employment or under Part 8 of the Employment Rights Act 1996;]

“maximum weekly amount" means the maximum weekly amount which, on the date on which the payment of compensation is made, is specified in section 227(1) of the Employment Rights Act 1996;

“part-time employment" has the same meaning as in regulation 6(8) (calculation of earnings of employed earners).

[F7 “paternity leave” means a period of absence from work on leave under section 80A or 80B of the Employment Rights Act 1996.]

[F8 “public authority” includes any person certain of whose functions are functions of a public nature;]

F9 ...

Textual Amendments

F3 Reg. 9(1)(j) substituted (8.12.2002) by Social Security Benefit (Computation of Earnings) (Amendment) Regulations 2002 (S.I. 2002/2823), regs. 1(a), 2(3)(a)

F4 Reg. 9(3) substituted (26.10.2009 for specified purposes) by Social Security Benefit (Computation of Earnings) (Amendment) Regulations 2009 (S.I. 2009/2678), regs. 1(3), 2(2)(a)

F5 Words in reg. 9(3)(b) substituted (1.7.2015) by The Social Security Benefit (Computation of Earnings) (Amendment) Regulations 2015 (S.I. 2015/784), regs. 1, 2(2)

F6 Reg. 9(3A) inserted (1.7.2015) by The Social Security Benefit (Computation of Earnings) (Amendment) Regulations 2015 (S.I. 2015/784), regs. 1, 2(3)

F7 Words in reg. 9(4) inserted (8.12.2002) by Social Security Benefit (Computation of Earnings) (Amendment) Regulations 2002 (S.I. 2002/2823), regs. 1(a), 2(3)(b)

F8 Words in reg. 9(4) inserted (26.10.2009 for specified purposes) by Social Security Benefit (Computation of Earnings) (Amendment) Regulations 2009 (S.I. 2009/2678), regs. 1(3), 2(2)(b)

F9 Words in reg. 9(4) omitted (1.7.2015) by virtue of The Social Security Benefit (Computation of Earnings) (Amendment) Regulations 2015 (S.I. 2015/784), regs. 1, 2(4)

Marginal Citations

M7 1996 c.18.

M8 1988 c.40.

Calculation of net earnings of employed earners E+W+S

10.—(1) For the purposes of regulations 3 (calculation of earnings) and 6 (calculation of earnings of employed earners) the earnings of a claimant derived from employment as an employed earner to be taken into account shall, subject to paragraphs (2) and (3), be his net earnings.

(2) Except in a case to which paragraph (3) applies, there shall be disregarded or deducted as appropriate from a claimant’s net earnings—

(a) any sum, where applicable, specified in Schedule 1; and

(b) any relevant child care charges to which Schedule 2 applies up to a maximum deduction in respect of any claimant of £60 per week.

(3) In the case of entitlement to [F2 carer’s allowance] under section 70 of the Contributions and Benefits Act M9 there shall be disregarded or deducted as appropriate from a claimant’s net earnings—

(a) any sum, where applicable, specified in Schedule 1; and

(b) any care charges to which Schedule 3 applies up to a maximum deduction, in respect of such care charges incurred by any claimant, of 50% of his net earnings less those sums, if any, specified in Schedule 1 which are disregarded.

(4) For the purposes of paragraph (1) net earnings shall be calculated by taking into account the gross earnings of the claimant from that employment less—

(a) any amount deducted from those earnings by way of—

(i) income tax;

(ii) primary Class 1 contributions under the Contributions and Benefits Act; and

(b) one half of any sum paid by the claimant in respect of a pay period by way of a contribution towards an occupational or personal pension scheme.

Textual Amendments

F2 Words in Sch. 3 substituted (1.4.2003) by Social Security Benefit (Computation of Earnings) (Amendment) Regulations 2002 (S.I. 2002/2823), regs. 1(b), 2(4), (5)(c)

Marginal Citations

M9 Section 70 was amended by S.I. 1994/2556.