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.
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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 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 or equivalent payroll record for the duration of the service.
If you continue to pay the employee their full earnings as usual while they are on jury service, you should 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 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 as described below.
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.
Instead, you need to take the following steps:
If you use commercial payroll software, many packages will perform this 'net to gross' calculation in step 3 automatically for you. But you'll have to complete the 'net to gross' calculation yourself if you use any of the following:
For help with this, contact HMRC's our Employer Helpline.
Find contact details for HMRC’s Employer Helpline
If your employee is on a cumulative tax code and received less than their usual earnings while on jury service, then they may have built up some unused Personal Allowance by the time they return to work.
If so, 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.
HMRC’s P11 Calculator will work out automatically whether your employee is entitled to a reduced tax payment or a refund. So will commercial payroll software. But if you use paper form P11s, you will have to work this out yourself.
The P11 Calculator is part of the Basic PAYE Tools package which is available to download from the Business Link website. In addition to the P11 Calculator, the tools include:
The procedures for dealing with employee tax refunds are explained in HMRC’s publication P49, 'Paying someone for the first time'. You may be able to apply for advance funding if you need to refund tax to an employee – follow the link below.
Download Basic PAYE Toolsfrom the Business Link website (Opens new window)
Advance funding for employee tax refunds
Download P49, 'Paying someone for the first time'
Using commercial payroll software or HMRC’s downloadableP11 Calculator
