Calculation of Construction Industry Holiday Payments

You define Construction Industry Holiday Payments for weekly paid employees by selecting ‘C.I.H.P.’ in the Type list box on the Payroll - Maintenance - Payment Profiles form. These payments only apply to weekly-paid employees.

If you add this payment to an employee record on the Payroll - Processing - Payments & Deductions form, then the Multiply for Holidays(this determines whether permanent payments are multiplied for the number of weeks that the employee is taking) option on the Payment Profile for all other payment types for the employee is ignored for when Construction Industry Holiday Payments are paid. The result is that all other types of payment are treated as belonging to the current pay period only, while the CIHP payment is used to cover the employee’s holiday pay. The sum of all other types of payments is used to calculate National Insurance using a single week’s limits.

Example ...

Use the CIHP type for the total of the employees pay in the holiday period. In the above example, the employee is paid £100.00 per week during their holiday, so the value for the CIHP type is £200.00. You can link CIHP to a type ‘H’ deduction if you want to reduce the holiday stamp fund accumulated for the employee.

The following describes the calculation process for those employees where a payment profile of type ‘I’ for construction industry holiday payments is included on the Payroll - Processing - Payments & Deductions form:

• For any payments on the form that are not type ‘I’, the setting of the Multiply for Holidays option is treated as though it is cleared (even if it was selected on the payment profile). For any deductions on the form, the setting of the Multiply for Holidays option is treated according to the setting on the deduction profile.

• National Insurance is based only on the current pay period and not the total number of periods being paid.

• There is no change with respect to calculation of PAYE where CIHP are involved. If type ‘I’ is selected in the Type list on the Payment Profile form, the application automatically selects the Taxable option to ensure that PAYE is calculated correctly. You cannot clear this option.

Note - National Insurance Concession for CIHP: From 30 October 2012 the National Insurance Concession for CIHP will be removed. From that date any holiday pay using a CIHP payment type is then subject to both employer's and employee's national insurance contributions. Existing payment profiles for CIHP should not be used after that date. Instead a new payment profile must be created with an empty Type and with at least the NI'able box selected.