Is it ok to pay a leaving employee early?

Is it ok to pay a leaving employee early?

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Client has an employee leaving on 6th November, but wants to pay everything owed in October payroll. This obviously has some impact on the NI contributions, although this isn't the reason for doing it. Is there anything to stop them from doing this from a tax perspective? (Leaving aside the risk of the employee walking out on 25th October once they've been paid and never coming back.....)

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By Euan MacLennan
15th Oct 2014 10:16

No - it is the legal requirement

If they are paid on 25 October, PAYE must be calculated on 25 October in Month 7, even if the pay includes work up to 6 November.  Only if they were to be paid for the last week or two on 6 November would you process the payment as on 6 November in Month 8.

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By whatdoyoumeanwashe
15th Oct 2014 10:25

Thanks Euan. And it doesn't matter that this can technically be used to reduce NI liability? On a similar note, an employee working 2 days a week, and their employer, could end up paying a lot less NI if they're paid monthly than if they're paid weekly. That's ok too, provided of course they are genuinely paid monthly and not weekly?

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