Help me understand my employee's dilema

bunny999

Yet more examples of what a farce the benefits system has become. The only solution is to abolish all child relatated benefits. OP - do what is best for you and your business.

Kimitatsu

Emmzi wrote: »

thanks all.. haven't got to the bottom of it but not sure it is my job to!! She tells me she is struggling with rent now I am paying her more and I simply cannot get my head around it... argh! It certainly hasn't put her in a higher tax bracket...

If I am being honest I dont think it is your job to - there may be other reasons that she does not want to disclose her personal details and this just happens to be one that she feels comfortable with.

All you can do as an employer is make the decision based on the needs of the business and if you are in a position to offer her part time hours then do so. I think you have had a good demonstration of the benefits trap from the previous poster, which unfortunately rings true.

Its a sad enditement of our society when someone works hard and is given a good pay rise only to find they have to cut their hours in order to be better off.

GobbledyGook

Could it be that the pay rise has pushed her over the limit for something?

I have a friend who recently was offered a pay rise, but the £2k payrise lead to a loss of £4k in benefits. As she isn't on a massive wage the loss of that extra £2k made it impossible for her to accept.

There are people who are genuinely caught up in a situation where they'd love to come off benefits, but the increase in salary doesn't cover what they'd lose and leaves them really struggling.

Gemstar30

GobbledyGook wrote: »

Could it be that the pay rise has pushed her over the limit for something?

I have a friend who recently was offered a pay rise, but the £2k payrise lead to a loss of £4k in benefits. As she isn't on a massive wage the loss of that extra £2k made it impossible for her to accept.

There are people who are genuinely caught up in a situation where they'd love to come off benefits, but the increase in salary doesn't cover what they'd lose and leaves them really struggling.

Hello

Yes you are quite right.

I do feel sorry for the employers in this country as they believe that people really want to work hard - which most do. But when it comes to the employee's own circumstances, many find that working hard does not always pay.

Too many complain that people should come off benefits and support themselves - I agree entirely, but at what cost?

Should they consider what is good for the country? Good for the employer? No, it is only right that they consider what is good for themselves first.

The two obvious answers are either to increase wages/salaries that no matter what, they will never be worse off as in these examples, or maybe reduce benefits to such an extent that working will always pay, even if they choose to work part time hours.

I suspect that the latter will be the case in future, but that will also impact on those that cannot find a job or cannot work through illness.

I wouldn't want the job of sorting out this mess!

Gemma
x

[Deleted User]

Yes in an ideal World there should be a good work incentive, i.e you are actually better off financially going to work, but unfortunately it's just not how it is at the moment. I know people will think people are taking advantage of the benefits system but quite simply it's a no brainer, why would you go to work for little or no benefit, for people who have never claimed benefits if someone said to you, right you can go to work today for £10 or you can stop at home and have £10 what would you do?

Jowo_2

My sister is a manager of a call centre and part-time workers are the bane of her life, particularly single parents, because they won't work more than the magic 16 hour threshold because it affects their benefits, principally their tax credits. This essentially means that it doesn't make it worth it to work extra hours because their benefit income can decrease either at a similar or greater rate to their pay. From her perspective, it's a pain because during periods of staff sickness, holiday or when the local road have flooding, it's a big detriment to customer operations. They do not want to work full time because they get a similar income from working part time and get the 'missing' wages topped up with working tax credit, child tax credit, housing benefit (local housing allowance) and council tax rebate, plus what they receive in child support from the non-resident parent doesn't impact these benefits, it's additional to them.

So what the govt intended as a way to encourage people to accept part time and low paid employment, particularly lone parents, has the flipside of being seen as a lifestyle choice - why work an extra 19 or 23 hours which can be spent with the kids if there's no great financial return from this?

Perhaps you could model the before and after pay rise scenarios in the Turn2us online benefit calculator? Obviously you know her wage and number of children, you could perhaps guestimate her council tax, rent and the maximum Local Housing allowance (housing benefit) she gets by looking at her entitlement on the LHA Direct website which will indicate the going rate for the size of property she can receive LHA for in her area.

To understand the flaws in the tax credit system and benefits system, have a read of the following document which provides examples which disincentivise people from taking up employment.

http://www.dwp.gov.uk/consultations/2010/21st-century-welfare/


It contains this case study which shows that the withdrawal of her benefits is so steep that when she works almost 50% more, she gets the equivalent of a £1 an hour for the extra time...

"Ms A, a lone parent with three school-age children, earns £7.50 an hour as an office administrator. She is working 23 hours a week, which gives her a net weekly income (including benefits and Tax Credits) of £345 after paying rent and Council Tax. She has been offered the opportunity to work for 34 hours a week. However, this extra effort would only give her about £10 more, so she has very little incentive to take on the extra work."

Googlewhacker

Jowo wrote: »

It contains this case study which shows that the withdrawal of her benefits is so steep that when she works almost 50% more, she gets the equivalent of a £1 an hour for the extra time...

"Ms A, a lone parent with three school-age children, earns £7.50 an hour as an office administrator. She is working 23 hours a week, which gives her a net weekly income (including benefits and Tax Credits) of £345 after paying rent and Council Tax. She has been offered the opportunity to work for 34 hours a week. However, this extra effort would only give her about £10 more, so she has very little incentive to take on the extra work."

Really there should be an onus on employers to report when an employee has been offered an increase in hours to a central body and then if the person refuses they must show why.

It wouldn't stop everyone taking the mick but would stop alot.

real1314

GobbledyGook wrote: »

Could it be that the pay rise has pushed her over the limit for something?

I have a friend who recently was offered a pay rise, but the £2k payrise lead to a loss of £4k in benefits. As she isn't on a massive wage the loss of that extra £2k made it impossible for her to accept.

There are people who are genuinely caught up in a situation where they'd love to come off benefits, but the increase in salary doesn't cover what they'd lose and leaves them really struggling.

I've a lot of experience in the benefits field and can honestly say that I cannot see any way at all that this could actually happen. I've seen people end up only £2 or £3 better off from a £10 rise, but I've never seen anyone end up £80 a week worse off from a £40 a week increase. What people say has happened and what has actually happened are often completely unrelated.

AnxiousMum

To the OP - you may advise her to look into changes to the benefits that are coming down the road - do some research and see if in six months, one year, she will regret rejecting the pay increase for hours worked. In that time, she may find that her housing benefit is greatly reduced anyway and the ONLY way she's going to be able to pay her rent, struggling like many of us or whatever, is by working and earning the money she needs to live on.

Jowo_2

Googlewhacker wrote: »

Really there should be an onus on employers to report when an employee has been offered an increase in hours to a central body and then if the person refuses they must show why.

It wouldn't stop everyone taking the mick but would stop alot.

No, there should be a benefits system which makes it attractive to be in employment! Make work pay instead of adding to more bureaucracy!