Notice to Providers
21 January 2008 (revisions to notice made on 25/01/08)
Better-off calculations and the lower earnings limit
Following a recent referral to the Independent Case Examiner by a Jobcentre Plus customer, could you please note the following when providing Better off Calculations for jobseekers who are considering taking up a vacancy.
Customers who are starting work of 16 hours or more, but who will be on a low wage, will need to check with their potential employer that national insurance contributions are due to be paid to protect their national insurance record.
The lower earnings limit is currently £87 per week. From 1 October 2007 the national minimum wage increased for those aged 22 or over to £5.52 per hour which means that those customers who start work for 16 hours will meet the requirement to have their national insurance contributions paid by the employer.
However, this will not be the case for customers under age 22. Currently, for 18-21 year olds the minimum wage is £4.60 per hour and for 16-17 year olds it is £3.40 per hour. For these customers, the employer is not liable to pay NIC and this could have an impact on future claims to benefits and pension.
If the employer will not be paying national insurance contributions the customer should be advised to contact HM Revenue and Customs to find out what they should do to ensure that they do not jeopardise their future entitlement to benefits or State Retirement Pension.
The lower earnings limit changes each year in April.