More employees are finding themselves better off by sacrificing some gross pay in return for non-cash benefits. Is there a catch? Gary Hull of PricewaterhouseCoopers finds out.
An employee’s entitlement to certain state benefits may
be based on either their record of NICs (‘contribution based
benefits’ such as Incapacity Benefit and Jobseeker’s Allowance)
or their level of earnings (‘earnings based benefits’ such
as Maternity Allowance).
Contribution-based benefits depend on the number of weeks
the employee has made NICs rather than the amount of the contribution
itself, so those benefits will normally be preserved provided
cash pay is not reduced below the NI lower earnings limit.
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