Social Security (Contributions) (Amendment No.13) (Jersey) Order 2012

Information about the publication of Ministerial Decisions

A formal published “Ministerial Decision” is required as a record of the decision of a Minister (or an Assistant Minister where they have delegated authority) as they exercise their responsibilities and powers.

Ministers are elected by the States Assembly and have legal responsibilities and powers as “corporation sole” under the States of Jersey Law 2005 by virtue of their office and in their areas of responsibility, including entering into agreements, and under any legislation conferring on them powers.

An accurate record of “Ministerial Decisions” is vital to effective governance, including:

demonstrating that good governance, and clear lines of accountability and authority, are in place around decisions-making – including the reasons and basis on which a decision is made, and the action required to implement a decision
providing a record of decisions and actions that will be available for examination by States Members, and Panels and Committees of the States Assembly; the public, organisations, and the media; and as a historical record and point of reference for the conduct of public affairs

Ministers are individually accountable to the States Assembly, including for the actions of the departments and agencies which discharge their responsibilities.

The Freedom of Information Law (Jersey) Law 2011 is used as a guide when determining what information is be published. While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.

A decision made on 21 December 2012:

Decision Reference: MD-S-2012-0113
Decision Summary Title :	DS Contributions Order Amend 13		Date of Decision Summary:	18 December 2012
Decision Summary Author:	Policy Principal		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	WR Contributions Order Amend 13		Date of Written Report:	18 December 2012
Written Report Author:	Policy Principal		Written Report : Public or Exempt?	Public
Subject: Social Security (Contributions) (Amendment No. 13) (Jersey) Order 2012.
Decision(s): The Minister made the Social Security (Contributions) (Amendment No. 13) (Jersey) Order 2012.
Reason(s) for Decision: To amend the Social Security (Contributions) (Jersey) Order 1975 to make provision in respect of two matters from 1 January 2013: To create transitional arrangements so that, from 1 January to 1 July 2013, benefits in kind will continue to be taken into account and valued in the same way as they were taken into account in 2011 and 2012 when they form part of a Class 1 insured person’s earnings or a Class 2 insured person’s income from self-employment. The transitional period is extended by a further six months to ensure that the possible impact on local businesses of the proposed changes have been fully considered and communicated to employers. To remove a disparity between the way in which payment in lieu of notice and holiday pay are assessed for the purpose of calculating Class 1 contributions, and the way in which they are defined for the purpose of calculating the deduction of contributions from the equivalent two components of insolvency benefit. The dates when holiday pay and notice pay are paid to the person are irrelevant for the purpose of insolvency benefit. The Order is amended so that contributions payable in respect of holiday and notice pay are deducted, irrespective of when the claimant actually receives the benefit payment.
Resource Implications: There are no specific financial or manpower implications in respect of this Order.
Action required: Policy Principal to notify the Greffe and the Law Draftsman that the Order has been made and to forward the signed and sealed Order to the States Greffe, requesting the Greffier of the States to arrange for the Order to be notified to the States.
Signature:		Position: Minister
Date Signed:		Date of Decision (If different from Date Signed):

Social Security (Contributions) (Amendment No.13) (Jersey) Order 2012

The Social Security (Contributions) (Amendment No.13) (Jersey) Order 2012

This Order amends the Social Security (Contributions) (Jersey) Order 1975, as amended (the ‘Order’), to make provision in respect of two separate matters from 1 January 2013.

Transitional arrangements in respect of definition of benefits in kind

An amendment is required to extend the transitional arrangements that relate to the values attributable to benefits in kind that are due to expire on 31 December 2012.

To accord with the aims of the Fiscal Strategy Review, the Minister for Social Security is responsible for bringing forward amendments to the Social Security legislation to provide for contributions above the current earnings limit from January 2012. The treatment of benefits in kind and other types of remuneration is being reviewed to provide greater clarity to assist employers, and to ensure equity between employers who provide pay packages of equal value through different means. This work is ongoing and will help businesses by making it clear what counts as earnings and what can be disregarded when calculating payments, as well as ensuring that unintended consequences are identified and addressed.

The Social Security (Contributions) (Amendment No. 11) (Jersey) Order 2012 and the Social Security (Contributions) (Amendment No. 12) (Jersey) Order 2012 created transitional arrangements so that, for the year 2012, benefits in kind would continue to be taken into account and valued in the same way as they were taken into account in 2011 when they form part of a Class 1 insured person’s earnings or a Class 2 insured person’s income from self-employment.

The Social Security (Contributions) (Amendment No. 13) (Jersey) Order 2012 extends the transitional period by six months to the 1 July 2013 to ensure that the possible impact on local businesses of the proposed changes have been fully considered and communicated to employers.

2. Contribution liability on holiday pay and notice pay

It is necessary to remove a disparity between the way in which payment in lieu of notice and holiday pay are assessed for the purpose of calculating Class 1 contributions, and the way in which they are defined for the purpose of calculating the deduction of contributions from the equivalent two components of insolvency benefit.

Article 26G(1) of the Social Security (Jersey) Law 1974 (the ‘Law’) provides that “If primary Class 1 contributions would have been payable in respect of any component specified in Article 26C if that component had been paid by the employer, their value shall be deducted from the component.” Article 26C specifies the four components of insolvency benefit, which include holiday pay and pay in lieu of notice.

Schedule 1(1) to the Order provides that holiday pay is treated as earnings of a Class 1 insured person, unless it is paid more than one month after the employment is terminated. Schedule 1(2) to the Order provides that a payment in lieu of notice is treated as earnings of a Class 1 insured person for a month in which the person leaves employment, except where it is paid after the end of the month in which the employment is terminated.

The dates when holiday pay and notice pay are paid to the person are irrelevant for the purpose of insolvency benefit. In practice, the holiday pay and notice pay components of insolvency benefit will often be paid to a claimant after the expiry of the relevant month. This is because it will take time for the person to submit their claim and for the Department to validate claims and process payments. In addition, the notice pay component of benefit cannot be paid until the statutory notice period has expired (between 1 and 12 weeks after employment ends).

The Social Security (Contributions) (Amendment No. 13) (Jersey) Order 2012 therefore provides that contributions payable in respect of holiday and notice pay are deducted, irrespective of when the claimant actually receives the benefit payment.

Resource Implications

There are no specific financial or manpower implications in respect of this Order.