NIM02245 - Class 1 NICs : Earnings of employees and office holders : National Health Service employees receiving injury benefits

National Health Service (NHS) employees may receive an Injury Benefit under the provisions of the NHS (Injury benefits) Regulations 1995.

NHS Injury Benefits are payable by the Secretary of State for Health.

Examples of NHS Injury Benefits are :

• for temporary injury – this guarantees the NHS employee 85% of their average earnings while they are absent from work
• for reduced earnings capacity – paid when an NHS employee’s average earnings are reduced by more than 10% because of an injury. This is a permanent benefit which remains in payment even if the employee leaves the NHS.

Both temporary injury allowances and allowances for reduced earning capacity are payments made to compensate the employee for not being able to earn their living or to earn it to the same level because of some industrial accident or disease.

The benefits are therefore not earnings within the meaning of section 3 of the Social Security Contributions and Benefits Act 1992 because they are not made as a consequence of the employment (see NIM02010) and are rather compensatory payments arising out of the accident or disease. As a result there is no liability for NICs on the amounts involved.