Chapter NIM10009

Published date11 April 2016
Record NumberNIM10009

There is no definition of the phrase “not reasonably practicable” in NICs legislation. We are reliant upon the ordinary meaning and case law, the latter arising from Health and Safety legislation. The following arguments also take into account an unreported determination by the Secretary of State for Social Security on whether the earnings of ‘Bank Nurses’ should be aggregated.

The onus is on the employer to show that aggregation is not reasonably practicable because it is the employer making the judgement. It is not a once and for all decision because the duty to aggregate is an ongoing duty. Also, factors may change - such as the composition of the labour force - sufficiently to affect the judgement. The employer will need to take into account the costs, resources, and the effects on running the business. Cost is a material pointer but not decisive. The context is important so the employer will also need to be aware of the effect on the National Insurance Fund (NIF) and the benefit or pension entitlement of the employee.

The reported judgements have to be filtered on the basis of their specific legislation but Mailer v Austin Rover Group [1989] (2 All ER 1087) agreed on three principles:

  • “reasonably practicable” is narrower than “physically possible”
  • risk has to be measured against the cost of removing it, and
  • account has to be taken of the likelihood of the risk arising.

Taking the principles in order:

  • It is always possible to aggregate but that is not the test. And the “separately calculated” provision is not failed merely because it is the same employer or payroll system.
  • Costs to the employer are not just financial. Time, effort and the effect on the business have to be considered because the weight of the cost of compliance should not be disproportionate to the loss of National Insurance Contributions and benefit entitlement.
  • Mailier and other cases are generally considering whether there is a duty to guard against unknown and unexpected events. It is the Department’s view that employers have a very limited argument on the 3rd bullet point because aggregation is a known and recurring event. However, that is not enough to negate any informed judgement by an employer that aggregation is not reasonably practicable.

The cases consider the balance between risk on one hand and the sacrifices necessary for averting the risk on the other. Basically, an employer needs to balance his employee’s interests against his own costs. It is very...

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