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NI Calculation - Late Payment Scenario

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Purpose:

The purpose of this Wiki is to understand how the calculation happens in case of late payment given to the leaver employee.

Overview:

To know more about this behavior, we must first review the necessary information, and then know how to reproduce it so that we can understand it.

1. Obtaining the necessary information:

For replicating the above scenario, let us understand the scenario.

Say an employee is hired from 01.04.2012 with NI category as D and made leaver in July. The employee is paid late payment in the month of September 2012 and we need to check the NI calculations in this case. Also we will deal with another case where the employee is paid late payment in the month of August 2012 and see how NI is calculated.

2. Additional Information

NI Calculation Tables

T5G_NICLIM

T5G_NICPCT

Table V_512W_D in SM30

Regular Income /132 (WT M110)

Irregular Income /133 (WT A001)

3. Reproducing the behavior:

Please refer the screenshots below where an employee is hired from 01.04.2012 and this shows the necessary infotype records to recreate this scenario:

IT0001 (Organizational Assignment)

IT0008 (Basic Pay Infotype):

IT0069 (National Insurance GB Infotype):

Now employee is made leaver from 20.07.2012 and the payroll is run till July Month.

Below screenshot shows the late payment given to the employee on 20.07.2012 (this date should be before leaving date)

Now we will see the difference in NI calculations when the employee is paid 1000 pounds of late payment in month of August and September 2012.

4. Conclusion:

The NI calculation will be done based on the nature of the payments as done to the employee after leaving, where the NI limits as applicable will be done from T5G_NICLIM.

a)      Incase employee has all payments as regular, i.e. /132 is only formed, then the NI Limits used will that of the employee normal pay frequency, as per payroll area, i.e. G1 = monthly, G0 weekly etc.

b)      Incase employee has all payments as irregular, i.e. /133 is only formed, then Weekly NI limits will only be used.

c)      If the payments include both regular as well as irregular, i.e. /132 as well as /133 are formed, then the NI Limits used will that of the employee normal pay frequency, as per payroll area, i.e. G1 = monthly, G0 weekly etc.

From the above , it can be inferred that the NI limits so used are not dependent of the date of payment done to the employee. This means if the payment is done to the employee more than 6 weeks, this has no impact on the limits so used!

The NI category used for late payment done to leaver employee will depend on the time when the payment was done since the employee has left.

a)      Where the payment after leaving is done within 6 weeks of employee leaving date, the employee normal NI category will be used to calculate the NI.

For Example: Employee currently is on NI category D .The same will be used for calculating NI for the payment done after leaving.

b)      Where the payment after leaving is done after 6 weeks of employee leaving date, then ONLY NI category A will used to calculate the NI .

For Example: Employee currently is on NI category D , since the payment is done after 6 weeks, NI category A will be used  for calculating NI for the payment done after leaving.

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