NI Calculation - Late Starter

Purpose:

The purpose of this Wiki is to understand how the calculation happens in case of late starter

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 concept what a late starter in GB payroll is.

For a given payroll area, say G1, Payroll for the month of April 2012 has been processed and exited. Now an employee is hired in this payroll area effective 01.04.2012. The employee is a late starter in payroll area G1, in the month May 2012.  

2. Additional Information

NI Calculation Tables

T5G_NICLIM

T5G_NICPCT

3. Reproducing the behavior:

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

IT0000 (Actions Infotype):

IT0001 (Organizational Assignment)

IT0008 (Basic Pay Infotype):

IT0069 (National Insurance GB Infotype):

Below screenshots show the payroll run for the month of May 2012 (i.e. Period 2 2012)

Payroll Log

For 1^st Period 01/2012 (01.04.2012 - 30.04.2012), No NI Calculation as this is a late starter period

For 2^nd Period 02/2012 (01.05.2012 - 31.05.2012), NI Calculations are as shown below

Hence according to the tables T5G_NICLIM & T5G_NICPCT, a total NIC of employee and employer is calculated in month of May 2012.

4. Reason:

For a late starter, Payment relates to 2 monthly pay periods so the system will do 2 separate calculations and NI for employee and employer will be added to get the total NI contributions.

The NIABLE pay, NI rates and Limits used for the calculation are based on the values valid when the earnings are paid i.e. May 2012 and not where they are earned (April 2012).