Contribution schedule guide for employers

Changes to contribution schedules

Updating the '8 hour rule'

A law change will be debated by the States Assembly in 2021 to make administration of payroll easier. 

It's proposed that the current rule will be replaced by a financial limit, equivalent to 8 hours at the minimum wage that is in place at the start of the year. 

If the employee reaches the threshold then you must pay the primary and secondary contributions. The threshold that you use is determined by the frequency that you pay your employee. 

Example thresholds

Changing from quarterly to monthly schedules

From January 2022 employer schedules will be submitted monthly on a new combined employer return.

The submission deadline for all employers will be 15 days following the end of the month in respect of the information that is required.

New threshold guidance

From 1 January 2022, employers will be required to pay primary and secondary Social Security contributions for any employees with wages at, or above, the minimum earnings threshold for the wage period.

The threshold will be set to an amount equivalent to working 8 hours a week at the minimum wage.

The current figures of £289 a month and £66 per week are used in this guidance, but the actual threshold will be set in October each year and be effective from 1 January the following year. 

Minimum earnings threshold

The threshold will depend on the normal wage period for the employee, for example:

• monthly
• weekly
• fortnightly
• four-weekly
  

Two and four weekly threshold

For employees paid every two weeks, the threshold will be twice the weekly threshold and for employees paid every four weeks it will be four times the weekly threshold.

Future changes to the minimum earnings threshold

The thresholds will be calculated by Government and published in the autumn for the following January.  This is at the same time the other Social Security earnings limits are updated.

New combined employer return information

About contribution schedules

A contribution schedule is a document that you fill in every quarter (every three months). Its main purpose is to let us know:​​

• who you have employed 
  
• ​how much you paid each employee in each month
  

We use this information to calculate how much Social Security you must pay to us.

You must give other information (where applicable):

• the date an employee joined or left your employment
• whether the employee has left the Island
• any changes to your employer details

As an employer you must pay the primary and secondary contributions for all employees who:

• work eight or more hours a week
• have a registration card marked FR1 on the back
• are aged between the compulsory school leaving age and 65 years old (contributions are due from the first month in which a person reaches compulsory school leaving age until the end of the month in which the person reaches 65)
• are labour only sub-contractors
• are not the spouse or civil partner of the company / business owner

Some employees may have elected not to pay primary contributions. They will be in possession of a card marked XR1, although employers would still be liable to pay secondary contributions, 6.5%.

The spouse or civil partner of the company / business owner must not be included on the schedule.

Contribution quarters

A contribution quarter is a three month period.

Contribution schedules and payments are collected for the three month period at the end of each contribution quarter.

The quarters are:

Submitting your schedule online

You can complete and submit your Social Security schedules, along with your ITIS and manpower returns, using the employer returns website. 

Any information you enter is stored, available for reference and will pre-populate your next return. 

You can also upload files for: 

• ITIS returns
• manpower returns
• benefit in kind (BIK) returns​

You can register and use the employer returns website.

Gross earnings

Gross earnings are earnings paid to an employee before any deductions are made.

A Social Security pay period is the same as a calendar month. 

The earnings should be declared for the month in which they were paid, not earned. 

Table showing items not to include in an employee's gross wages

Table showing items to include in an employee's gross wages

How to show holiday pay on a contribution schedule

Many employers pay their employees holiday pay before the normal pay day.

For example: a weekly paid employee is taking two weeks holiday at the beginning of August.

Their wages are £250 per week.

You pay them £750 wages in the last week of July; the normal week’s wage plus two weeks for the August holidays.

In this example, two weeks wages would normally have been paid in August. 

So you have to treat those two weeks salary as if you had actually paid them in August. 

You should complete the schedule as follows:

You deduct Social Security contributions as if the wages were paid at the normal time.

Employees who receive pay after they have left your employment

Any wages paid to someone after they have left, must be treated as if it had been paid in the month they left. 

If the payment is one that should be included in gross earnings, Social Security contributions are due and payable.

If you haven’t returned your schedule yet 

​If the contribution schedule hasn’t been returned yet, add the extra pay to that already paid and show the total on the schedule.

If the total earnings are above the monthly earnings ceiling, only deduct contributions up to the ceiling.

If you have already returned your schedule 

If the contribution schedule has already been returned, contact Customer and Local Services and ask for a supplementary schedule.

On the supplementary schedule, show the monthly earnings less the earnings shown on the original schedule.

For example, additional earnings for January 2021:

In this example, you should show additional earnings of £900 on the supplementary schedule.

You’ll be required to pay 2.5% of the earnings above the monthly earnings ceiling of £4,610. In this example, you will pay 2.5% on £290.

If you’re in any doubt whether a particular payment should be included in the gross earnings, contact Customer and Local Services.

How to show Social Security benefit deductions on the schedule

This only applies to you if:​

• you continue to pay employees the normal wage during illness
• the employee gives you the value of the Social Security benefit they receive

It’s important to adjust the wages on the schedule in the month the employee was ill.

For each day that we pay benefit, a credit is put on the employee’s account.

These credits protect the employee’s Social Security record against the loss of earnings.

It can be difficult to work out ​the correct earnings to show on the schedule as there is usually a delay in the employee being ill and you being given the Social Security benefit. 

It may be necessary for you to adjust the contributions deducted in a month after the illness.

Example:

An employee is ill for ten days in August.

They give you the value of the Social Security benefit in September.

​Their normal wages are £1,500 per month and the value of the benefit is £254.30

​In reality, you will have adjusted the employee’s wages and contributions in September.

However, on the schedule you must show the adjustment as if it had been made in the month of illness.

Don’t worry that your wage records will be different from the schedule; make a note in your records that this is due to the Social Security benefit.

Unusual pay practices that reduce or avoid contributions

Employees are usually paid on a weekly or monthly basis, however there may be occasions when this practice is not followed.

We can recalculate the contributions due for all employees back to when the unusual pay practice started. The contributions will be calculated as if a normal pay practice had been followed.​

Calculation of contributions

Calculating the correct deduction

We have an online contributions calculator to help you in calculating an employee's correct contribution.

If you want, you can use your own accounting machinery instead.

You can learn more about how contributions are calculated below.

The contribution month

The earnings should be declared for the month in which they were paid, not earned.

Importantly, when a payment of wages (normally made in one month) is paid in a different month, it should be treated as being paid at the normal time.

For example, teachers may be paid their August wages at the end of the school year in July.

The wages paid early should be shown on the schedule as if they were actually paid in August.

Weekly paid employees

Social Security contributions are deducted in 25p steps for weekly paid employees.

This means that you should round the earnings down to £0.00, £0.25, £0.50 or £0.75 before working out the contributions.

For example:

Keeping a running total of weekly paid wages

It is important to keep a running total of wages paid to an employee in a calendar month.

Contributions are only payable on earnings up to the monthly earnings ceiling.

If a weekly paid employee receives earnings of more than the monthly earnings ceiling, the contributions must be adjusted.

In this example, it is assumed that the monthly earnings ceiling is £4,610. 

In week five, the combined earnings for the month are more than the monthly earnings ceiling by £240 (£4,850 - £4610 = £240)

Monthly paid employees

Social Security contributions are deducted on round pounds for monthly paid employees.

​Always round the earnings down to the nearest whole pound before working out the contributions.​

Four-weekly paid employees

Normally there is one four-weekly payment in each month and each payment can be treated as a monthly payment.

Occasionally two four-weekly payments fall in the same month, so these payments should be added together to give the monthly payment.

Make sure that contributions aren’t deducted on earnings above the monthly earnings ceiling. 

​Fortnightly

Usually two, and sometimes three, fortnightly payments will fall in one month.

​These payments must be combined in a similar way to weekly paid earnings.

Daily

As long as the employee works eight hours or more in a week, contributions are still due.

​These earnings must be dealt with in a similar way to weekly paid earnings.

Earnings period in after one month

Step 1

Write the Social Security number and name of all your employees on the schedule.

Use a black ball point pen to fill in the schedule. Write each digit or letter in a separate box as shown:

The clearer you complete the schedule the less chance there will be for error.

Step 2

When you've worked out the earnings to be shown on the contributions schedule for a particular month, write them on the contributions schedule.

Only put down whole pounds. Don't include pence or the £ sign. Write each number in a separate box.

For example, you should enter £1,204.30 as:

Step 3

Before returning the contribution schedule to us, check the following:

• all your employees working eight hours or more per week are shown on the schedule
• the correct earnings are entered for each employee
• employees who have joined you during the quarter have a start date entered
• employees who left you during the quarter have a left date entered
• if you know that an employee has left the Island, that an X is shown in the appropriate column
• if any of your employer details have changed, enter the new details on the back of the schedule
• you've filled in the Employer’s Declaration
• you've signed and dated the declaration
• you've not added the spouse or civil partner of the company / business owner

Step 4

Send the contribution schedule to us without payment.

We must have received your contribution schedules or before the 15th day of the month following the end of a quarter.

Remember to photocopy the schedule if you want to keep a copy.

Payment of contributions

​As soon as your schedule is fully processed, a statement of account will be sent to you. Payment is due on demand, but we give seven working days for you to pay the account.

You can pay by:

• debit card, either by Freephone 08000237087 or in person
• Direct Debit monthly in arrears (we'll send you a Direct Debit form to complete)
• BACS payment directly into our bank account (sort code 40-25-34 account number 12155001). We'll also need your Social Security number or employer code and period
• cash or cheque made payable to the Social Security Department
• If you pay your contributions by Direct Debit, your rate will be calculated from your tax details. We'll let you know if your rate has been amended.

If you want to pay by BACS, contact the Contributions and Enforcement section and they'll explain what you need to do.

If you can’t settle the contributions requested against your own accounts, contact us.

Employers with 80 staff or more

If you employ 80 staff or more, you need to pay contributions on a monthly basis.

Payment is due by the 15th day of the month directly following the month that the contribution has been calculated for.

For example:

Don't send the schedule in every month. 

It should be returned at the end of the quarter in the usual way.

Changes in employees’ circumstances

Turning 16​​

From the first day of the month that an employee turns 16 years old, they must start paying contributions.​

If the employee is working eight hours a week or more, you have to pay contributions for them.

Leaving employment

​If you have the employee’s Social Security or registration card, give it back to them. ​

Write the date the employee left your employment in the 'Left' column on the schedule.

Working past pension age​

​An employee doesn’t have to pay contributions from the month after they reach pension age.

The employee must exchange their Social Security or registration card for a new registration card.

You must stop deducting 6% from their wages and continue to pay contributions for as long at the employee is working for you. 

This means you must continue to put them on the contributions schedule and pay secondary contributions of 6.5%.

Death

​Contributions are required for all wages paid up to and including the date of death.​

Wages paid after the death should be ignored when working out what contributions should be paid.

Choosing not to pay contributions​

​Some people can choose not to pay contributions.​

The employee must exchange all their current cards, marked FR1, for a new registration card marked XR1, once we have approved this. 

They'll ask you for their Social Security or registration card if you still hold it.

You’ll need to carry on deducting primary contributions from their wages until they show you a new registration card marked XR1.

A photocopy of the card should be kept for your records with a copy of their photographic ID.

Never stop deducting contributions on the word of the employee. The registration card is your only authority.

Choosing to start paying contributions

An employee who has made an election not to pay may cancel it at any time.​

They must exchange all their Social Security or registration cards marked XR1 for a registration card marked FR1.

Do not deduct primary contributions from their wages until they give you the registration card. The

Employee with a married woman’s election (red / XR1 card) divorces​

If a married woman who has a non-paying election becomes divorced, they must start paying contributions from the first of the month following the date of her decree absolute. ​

The employee must tell us that she is divorced and the date of the decree absolute. 

She must also exchange her current cards for a new registration card marked FR1.

A photocopy of the card should be retained for your records together with a copy of their photographic ID.

​What to do if you make a mistake on your contribution schedule

If you make a mistake on a contribution schedule​​

If you make a mistake while completing your schedule, you should cross out the whole line and rewrite it on a new line.

If you realise that a mistake was made after you've returned your contribution schedule,  you should write to or email Customer and Local Services telling us the correct earnings that should have been shown on the schedule.

Payment of gross earnings​ mistakes

If you pay an employee an incorrect amount of earnings in one month and adjust the earnings in the following month, you must show the earnings that should have been paid on the schedule.

Missing an employee off the schedule​​

If you have missed an employee off completely, or have not included some of their wages, contact us so we can send you a supplementary schedule. 

You must show the items that you have missed off the original schedule.​