32.—(1) Subject to paragraph (2), “earnings” means in the case of employment as an employed earner, 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 or any lump sum payment intended as compensation for the loss of employment but only in so far as it represents loss of income;
(d)any holiday pay except any payable more than 4 weeks after termination or interruption of the 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 Article 146(4) and 151(3)(a) of the Employment Rights Order(1) (remedies for unfair dismissal);
(h)any such sum as is referred to in section 112 of the Act(2) (certain sums to be earnings for social security purposes);
(i)any statutory sick pay, statutory maternity pay, statutory paternity pay or statutory adoption pay, or a corresponding payment under any statute of the Parliament of the United Kingdom extending solely to Great Britain;
(j)any payment made under the legislation of, or under any scheme operating in, the Republic of Ireland which is analogous to income to which sub-paragraphs (g) to (i) relate;
(k)any remuneration paid by or on behalf of an employer to the claimant who for the time being is on maternity leave, paternity leave or adoption leave or is absent from work because he is ill;
(l)the amount of any payment by way of a non-cash voucher which has been taken into account in the computation of a person’s earnings in accordance with Part V of Schedule 3 to the Social Security (Contributions) Regulations 2001(3).
(2) Earnings shall not include—
(a)subject to paragraph (3), any payment in kind;
(b)any payment in respect of expenses wholly, exclusively and necessarily incurred in the performance of the duties of the employment;
(c)any occupational pension.
(3) Paragraph (2)(a) shall not apply in respect of any non-cash voucher referred to in paragraph (1)(l).
33.—(1) For the purposes of regulation 26, the earnings of a claimant derived or likely to be derived from employment as an employed earner to be taken into account shall, subject to paragraph (2), be his net earnings.
(2) There shall be disregarded from a claimant’s net earnings, any sum, where applicable, specified in paragraphs 1 to 14 of Schedule 5.
(3) For the purposes of paragraph (1) net earnings shall, except where paragraph (6) applies, be calculated by taking into account the gross earnings of the claimant from that employment over the assessment period, less—
(a)any amount deducted from those earnings by way of—
(i)income tax;
(ii)primary Class 1 contributions under the Act;
(b)one half of any sum paid by the claimant by way of a contribution towards an occupational pension scheme;
(c)one half of the amount calculated in accordance with paragraph (5) in respect of any qualifying contribution payable by the claimant; and
(d)where those earnings include a payment which is payable under any statute of the Parliament of the United Kingdom extending solely to Great Britain and which corresponds to statutory sick pay, statutory maternity pay, statutory paternity pay or statutory adoption pay, any amount deducted from those earnings by way of any contributions which are payable under any statute of the Parliament of the United Kingdom extending solely to Great Britain and which correspond to primary Class 1 contributions under the Act.
(4) In this regulation “qualifying contribution” means any sum which is payable periodically as a contribution towards a personal pension scheme.
(5) The amount in respect of any qualifying contribution shall be calculated by multiplying the daily amount of the qualifying contribution by the number equal to the number of days in the assessment period; and for the purposes of this regulation the daily amount of the qualifying contribution shall be determined—
(a)where the qualifying contribution is payable monthly, by multiplying the amount of the qualifying contribution by 12 and dividing the product by 365;
(b)in any other case, by dividing the amount of the qualifying contribution by the number equal to the number of days in the period to which the qualifying contribution relates.
(6) Where the earnings of a claimant are estimated under regulation 26(2)(b), his net earnings shall be calculated by taking into account those earnings over the assessment period, less—
(a)an amount in respect of income tax equivalent to an amount calculated by applying to those earnings the lower rate or, as the case may be, the lower rate and the basic rate of tax applicable to the assessment period less only the personal relief to which the claimant is entitled under section 257(1) of the Taxes Act(4) (personal allowance) as is appropriate to his circumstances but, if the assessment period is less than a year, the earnings to which the lower rate of tax is to be applied and the amount of the personal relief deductible under this sub-paragraph shall be calculated on a pro-rata basis;
(b)an amount equivalent to the amount of the primary Class 1 contributions that would be payable by him under the Act in respect of those earnings if such contributions were payable; and
(c)one half of any sum which would be payable by the claimant by way of a contribution towards an occupational or personal pension scheme, if the earnings so estimated were actual earnings.
(7) Where the claimant is an employed earner in the Republic of Ireland the amounts to be deducted for income tax and primary Class 1 contributions under this regulation shall be such amounts as, in the opinion of the appropriate authority, would have been deducted had the claimant been employed in Northern Ireland.
Article 146(4) was amended by paragraph 10 of Schedule 1 to the Employment Rights (Dispute Resolution) (Northern Ireland) Order 1998 (S.I. 1998/1265 (N.I. 8)), Schedule 9 to the Employment Relations (Northern Ireland) Order 1999 (S.I. 1999/2790 (N.I. 9)) and paragraph 2(6) of Schedule 5 to the Employment (Northern Ireland) Order 2003 (S.I. 2003/2902 (N.I. 15)) and Article 151(3) was amended by paragraph 11 of Schedule 1 to the Employment Rights (Dispute Resolution) (Northern Ireland) Order 1998, Article 32(2) of, and Schedule 9 to, the Employment Relations (Northern Ireland) Order 1999 and paragraph 2(6) of Schedule 5 to the Employment (Northern Ireland) Order 2003
Section 112 was amended by Schedule 1 to the Employment Rights (Northern Ireland) Order 1996 and paragraph 21 of Schedule 3 to the Social Security Contributions (Transfer of Functions, etc.) (Northern Ireland) Order 1999 (S.I. 1999/671)
Section 257 was substituted by section 33 of the Finance Act 1988 (c. 39)