What’s a pay reference period (PRP)?

Under auto-enrolment rules, this is the period of time over which earnings are to be measured. For example, if an employee is paid weekly, the pay period would be one week and if they are paid monthly, the pay period would be one month. The minimum pay period is one week.

To align with the pay frequency used to calculate PAYE and National Insurance contributions, the pay period can be a tax week, or a tax month.

The below scenarios provide further guidance:

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  • Calendar-week payrolls

If employees are paid every Friday for work they completed that week, commencing Sunday and ending Saturday, their pay period will commence on Sunday. So, when the employee was paid on Friday, 6 November 2015, the pay period for that week’s pay commenced on Sunday, 1 November 2015 and ended on Saturday, 7 November 2015.

  • Calendar-fortnightly payrolls

If employees are paid every second Friday for work they completed that fortnight, commencing Sunday, their pay period will commence on Sunday and will end on the second Saturday thereafter. So, when the employee was paid on Friday, 6 November 2015, the pay period for that fortnight’s pay commenced on Sunday, 25 October 2015 and ended on Saturday, 7 November 2015.

  • Four-weekly payrolls

If employees are paid for work completed in respect of every four-week period, typically their pay date will occur during the first week of that four-week period. So, if the four-week period commenced on Monday, 5 October 2015, the pay date would be on Friday, 9 October 2015, and the pay period would have ended on Sunday, 1 November 2015.

  • Calendar-month payrolls

If employees are paid on 26 October 2015 for work done during the calendar month of October, their pay period will be for the period starting on 1 October 2015 and ending on 31 October 2015.

  • Tax-week payrolls

If employees are paid every Friday and their pay date was on Friday, 6 November 2015, since tax weeks run from Sunday to the following Saturday, the pay period would have commenced on Sunday, 1 November 2015 and would end on Saturday, 7 November 2015 (tax week 30).

  • Calendar-month payrolls – paying in arrears

If employees are paid on every last Friday of the month, in respect of work completed in the previous month, the pay period will commence on the start date of the current pay period. So, if an employee was paid on Friday, 30 October 2015, in respect of work done in September, the pay period would have commenced on 1 October 2015 and would have ended on 31 October 2015.

For more information on pay reference periods see The Pension Regulator  .

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