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SCHEDULE 1 CALCULATION OF N AND M

PART I EARNINGS

Chapter 1Earnings of an employed earner

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

(a)any bonus, commission, [F1payment in respect of overtime,] royalty or fee;

[F2(aa)any profit-related pay, whether paid in anticipation of, or following, the calculation of profits;]

(b)any holiday pay except any payable more than 4 weeks after termination of the employment;

(c)any payment by way of a retainer;

[F3(d)any payments made by the parent’s employer in respect of any expenses not wholly, exclusively and necessarily incurred in the performance of the duties of the employment, including any payment made by the parent’s employer in respect of—

(i)travelling expenses incurred by that parent between his home and place of employment; and

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

(e)any award of compensation made under section 68(2) or 71(2)(a) of the Employment Protection (Consolidation) Act 1978 M1 (remedies and compensation for unfair dismissal);

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

(g)any statutory sick pay under Part I of the Social Security and Housing Benefits Act 1982 M2 or statutory maternity pay under Part V of the Social Security Act 1986 M3;

(h)any payment in lieu of notice and any compensation in respect of the absence or inadequacy of any such notice but only insofar as such payment or compensation represents loss of income;

(i)any payment relating to a period of less than a year which is made in respect of the performance of duties as—

(i)an auxiliary coastguard in respect of coast rescue activities;

(ii)a part-time fireman in a fire brigade maintained in pursuance of the Fire Services Acts 1947 to 1959 M4;

(iii)a person engaged part-time in the manning or launching of a lifeboat;

(iv)a member of any territorial or reserve force prescribed in Part I of Schedule 3 to the Social Security (Contributions) Regulations 1979 M5;

(j)any payment made by a local authority to a member of that authority in respect of the performance of his duties as a member, other than any expenses wholly, exclusively and necessarily incurred in the performance of those duties.

(2) Earnings shall not include—

(a)any payment in respect of expenses wholly, exclusively and necessarily incurred in the performance of the duties of the employment [F4except any such payment which is made in respect of housing costs and those housing costs are included in the calculation of the exempt or protected income of the absent parent under regulation 9(1) (b) or, as the case may be, regulation 11(1) (b)];

(b)any occupational pension;

(c)any payment where—

(i)the employment in respect of which it was made has ceased; and

(ii)a period of the same length as the period by reference to which it was calculated has expired since that cessation but prior to the effective date;

(d)any advance of earnings or any loan made by an employer to an employee;

(e)any amount received from an employer during a period when the employee has withdrawn his services by reason of a trade dispute;

(f)any payment in kind;

(g)where, in any week or other period which falls within the period by reference to which earnings are calculated, earnings are received both in respect of a previous employment and in respect of a subsequent employment, the earnings in respect of the previous employment.

[F5(h)any tax-exempt allowance made by an employer to an employee [F6except any such allowance which is made in respect of housing costs and those housing costs are included in the calculation of the exempt or protected income of the absent parent under regulation 9(1)(b) or, as the case may be, regulation 11(1)(b)].]

(3) The earnings to be taken into account for the purposes of calculating N and M shall be gross earnings 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 [F7or under the Social Security Contributions and Benefits (Northern Ireland) Act 1992]; and

(b)one half of any sums paid by the parent towards an [F8occupational pension scheme].

[F9(c)one half of any sums paid by the parent towards a personal pension scheme, or, where that scheme is intended partly to provide a capital sum to discharge a mortgage secured upon the parent’s home, 37.5 per centum of any such sums.]

Textual Amendments

Marginal Citations

M5S.I. 1979/591; the relevant amending instrument is S.I. 1980/1975.

2.—[F10(1) Subject to sub-paragraphs [F11(1A)] to (4), the amount of the earnings to be taken into account for the purpose of calculating N and M shall be calculated or estimated by reference to the average earnings at the relevant week having regard to such evidence as is available in relation to that person’s earnings during such period as appears appropriate to the [F12Secretary of State] beginning not earlier than eight weeks before the relevant week and ending not later than the date of the assessment and for the purpose of that calculation or estimate he may consider evidence of that person’s cumulative earnings during the period beginning with the start of the year of assessment (within the meaning of section 832 of the Income and Corporation Taxes Act 1988) in which the relevant week falls and ending with a date no later than the date of the assessment.]

[F13(1A) Subject to sub-paragraph (4), where a person has claimed, or has been paid, [F14working tax credit or child tax credit] on any day during the period beginning not earlier than eight weeks before the relevant week and ending not later than the date on which the assessment is made, the [F15Secretary of State] may have regard to the amount of earnings taken into account in determining entitlement to those benefits in order to calculate or estimate the amount of earnings to be taken into account for the purposes of calculating N and M, notwithstanding the fact that entitlement to those benefits may have been determined by reference to earnings attributable to a period other than that specified in sub-paragraph (1).]

[F16(2) Where a person’s earnings during the period of 52 weeks ending with the relevant week include—

(a)a bonus, commission, or payment of profit-related pay made in anticipation of the calculation of profits which is paid separately from or in relation to a longer period than, the other earnings with which it is paid; or

(b)a payment in respect of profit-related pay made following the calculation of the employer’s profits,

the amount of that bonus, commission or profit-related payment shall be determined for the purposes of the calculation of earnings by aggregating any such payments received in that period and dividing by 52.]

(3) Subject to sub-paragraph (4), the amount of any earnings of a student shall be determined by aggregating the amount received in the year ending with the relevant week and dividing by 52 or, where the person in question has been a student for less than a year, by aggregating the amount received in the period starting with his becoming a student and ending with the relevant week and dividing by the number of complete weeks in that period.

[F17(3A) Where a case is one to which regulation 30A(1) or (3) of the Maintenance Assessment Procedure Regulations applies (effective dates of new maintenance assessments in particular cases), the term “relevant week" shall, for the purpose of this paragraph, mean the period of 7 days immediately preceding the date on which the information or evidence is received which enables a [F18the Secretary of State] to make a new maintenance assessment calculated in accordance with the provisions of Part I of Schedule 1 to the Act in respect of that case for a period beginning after the effective date applicable to that case.]

(4) Where a calculation would, but for this sub-paragraph, produce an amount which, in the opinion of the [F19Secretary of State], does not accurately reflect the normal amount of the earnings of the person in question, such earnings, or any part of them, shall be calculated by reference to such other period as may, in the particular case, enable the normal weekly earnings of that person to be determined more accurately and for this purpose the [F19Secretary of State] shall have regard to—

(a)the earnings received, or due to be received, from any employment in which the person in question is engaged, has been engaged or is due to be engaged;

(b)the duration and pattern, or the expected duration and pattern, of any employment of that person.

Textual Amendments