Employee goes on jury service
If one of your employees is on jury service you are not obliged to pay them anything, although you can if you wish and many employers do. The PAYE (Pay As You Earn) tax and National Insurance contributions (NICs) procedures you'll need to follow depend on whether you pay employees on jury service and, if so, how much you pay them.
PAYE tax and NICs for payments to employees on jury service
You have three options when deciding whether or how to pay an employee who goes on jury service. You can pay them nothing, continue paying their earnings in full, or top up a loss-of-earnings allowance they may receive from the court.
If you pay your employee nothing
If you choose not to pay an employee who goes on jury service, then there is no need to make any entries on the employee's form P11 for the duration of the service.
If you continue paying the employee's earnings in full
If you continue to pay the employee their full earnings as usual while they are on jury service, you can continue to operate your payroll for them as usual. Work out the PAYE tax and NICs due on your payments to the employee in the normal way.
If you top up a court loss of earnings allowance
If you don't continue paying an employee's full earnings, they can apply to the court for a loss of earnings allowance. In order for your employee to do this, you will have to confirm for the court the amount of net pay the employee will lose by being on jury service.
You can disregard the court's loss of earnings payment for PAYE tax and NICs purposes, because it counts as compensation, not earnings from their employment with you. But if you decide to top up the allowance so the employee will still take home their usual amount of earnings, you will have to calculate PAYE tax and NICs on your top-up payment.
Working out the PAYE tax and NICs due on a top-up payment
If you make a top-up payment to an employee on jury service, take care to calculate PAYE tax and NICs deductions using the correct gross pay figure.
A common mistake is to subtract the amount of the court's loss of earnings payment from the employee's usual gross pay amount and to use the resulting figure. However, this will leave the employee receiving more than their usual earnings, which is not permitted for someone receiving a court loss of earnings allowance.
You must subtract the amount of the court's loss of earnings payment from the employee's usual net (or take-home) pay. The amount you're left with is the net pay your employee needs to receive from you in order to end up with their usual take-home earnings for the week or month. We can call this amount X for the purposes of illustration.
The next step is to establish what the gross pay figure is that will leave the employee with net pay X after you have deducted PAYE tax and NICs.
Unfortunately our integrated P11 Calculator on the Employer CD-Rom and our other PAYE tools cannot be used to complete this 'net to gross' calculation for you. Many commercial payroll software packages do have this function. If you need assistance, you should contact our Employer Helpline on Tel 08457 143 143. The helpline is open from 8.00 pm to 8.00 pm, Monday to Friday and from 8.00 am to 5.00 pm on Saturday and Sunday.
When the employee returns to work
If your employee is on a cumulative tax code and receives less than their usual earnings while on jury service, then they will have built up some unused Personal Allowance by the time they return to work.
This will reduce the amount of PAYE tax due on their first payday after returning to work. It may even mean that they're entitled to a tax refund.
The P11 Calculator on our Employer CD-Rom will work out automatically whether your employee is entitled to a reduced tax payment or a reduction. So will commercial payroll software. But if you use paper form P11s, you will have to work this out yourself.
The procedures for dealing with employee tax refunds are explained on page 62 of our publication 'New Employer - Paying someone for the first time' (P49). You may be able to apply for advance funding if you need to refund tax to an employee – use the link below.
Advance funding for employee tax refunds
Download our publications 'New Employer - Paying someone for the first time' (P49) (PDF 2.18MB)
Using the P11 Calculator on our Employer CD-Rom - find out more
