Employment abroad is interrupted or ends
What if an employee abroad is sick or on leave?
As long as the employer continues to pay earnings (including any overseas allowances) to an employee, contributions continue to be payable within the 52 week period of Class 1 liability, even during periods of sickness or leave.
If earnings or any overseas allowances are not paid during periods of sickness or leave, Class 1 contributions are not payable.
Since 1996 Statutory Sick Pay and Statutory Maternity Pay may be paid to employees working outside the EEA. Employees should continue to claim state Incapacity Benefit or Maternity Allowance on return to the UK.
What if an employee returns to the United Kingdom (UK) on paid leave?
If an employee returns on paid leave during the first 52 weeks, continue paying contributions only until the 52 week period expires. After that there will be no National Insurance liability unless and until the employee takes up duties in the UK (for temporary duty see the section here).
If the employee goes to work abroad again, a further period of liability will arise only in the circumstances described in ‘Successive periods of employment abroad’ see here
What if an employee returns to the United Kingdom (UK) on paid sick leave?
The position is the same as for paid leave. However if it is decided that the employee will not resume the employment abroad, liability for contributions will then arise in the normal way on earnings in the UK.
What if an employee returns to the United Kingdom (UK) on unpaid leave?
There is no liability for contributions for any period of unpaid leave whether or not it occurs during the first 52 weeks abroad. The period of 52 week liability is not extended if periods of unpaid leave fall within it.
What if an employee returns to the United Kingdom (UK) for a period of temporary duty?
If an employee returns to the UK on temporary duty, the position will depend on the nature of the duties. If they are:
- incidental to overseas employment (eg briefing or further training for that employment) treat the employee as still abroad. Continue to deduct Class 1 contributions until the 52 week period of Class 1 liability is met
- not incidental to overseas employment and the 52 week period of liability has ended:
- disregard the first 6 weeks of employment in the UK. This is not a legal requirement. It is a concession to ease administration when an employee briefly returns to the UK. However this only applies to situations where employees are returning to the UK for the same employer.
- pay contributions in the normal way for any further period in the UK.
(Where the 52 week period has not ended, it is not extended by any period of employment in the UK which falls within it.)
If the employee goes to work abroad again after the 52 week liability period has ended, a further period of liability will arise only in the circumstances described in ‘Successive periods of employment abroad’
What happens when employees return to the United Kingdom (UK) on completion of a period of employment abroad?
If an employee returns to the UK at the end of employment abroad, Class 1 contributions will be payable from the first payment of earnings after return unless:
- they are on paid leave immediately following employment abroad and will not be resuming work for the same employer and
- the 52 week period of liability for contributions had ended before returning to the UK.
If only the second condition is satisfied
If only the second condition is satisfied, Class 1 contributions are payable on that part of the first payment of earnings after return which results from employment in the UK.
If both conditions are satisfied
If both conditions are satisfied, contributions do not have to be paid on earnings paid during the period of paid leave, unless the employee starts work for a different employer during this leave. Contributions would then be paid in the normal way by the new employer.
Other special arrangements affecting employees abroad
Successive periods of employment abroad
If, after completing a period of employment abroad and returning to the UK, an employee starts a further period of employment abroad, a further period of 52 weeks’ liability will arise only where the three conditions set out here are fulfilled.
It may be necessary to determine whether the employee has resumed residence in the UK immediately before starting the further period of employment abroad. There is no fixed length of time which determines whether residence has been resumed. The question depends on individual circumstances.
Take the following points into account:
What length of time has the employee spent in the UK on return?
The longer the return, the more likely that they have resumed residence.
Did the employee stay at their own home during this time?
Staying at their own home, whether as owner or tenant, would point to a resumption of residence. Staying with relatives or friends with whom they would not usually live or in a hotel is less likely to point to resumption of residence.
What was the purpose of returning?
A return for medical treatment or recovery from illness abroad would not point to a resumption of residence.
A return for purposes which are incidental to the employment abroad, eg for briefing or further training would not be a strong indication that residence has been resumed.
Visits to family who have remained at the employee’s home in the UK or periods of leave spent at the employee’s home in the UK could indicate that residence has resumed.
A claim for UK state benefit would point to a resumption of residence.
Short intermittent periods of duty abroad
The rules on this page (‘What if an employee returns to the United Kingdom (UK) on paid leave’ to ‘Successive periods of employment abroad’) do not apply to people who are employed mainly in the UK but go abroad for short periods of duty. Class 1 contributions are payable for:
- the employment in the UK and
- for each period they spend abroad.
This is provided that no one period of employment abroad exceeds 52 weeks, see here.
Change of employer while abroad
If an employee for whom Class 1 contributions are being
paid changes employer while abroad, liability for contributions will cease with the last
payment of earnings made by the first employer.
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