Help me understand my employee's dilema

FBaby

Deleted_User wrote: »

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?

Choose to work because £10 earned working is likely to increase with work experience, promotions etc... £10 benefits will still £10 plus basic increase in years....

I am now worse off than I was before I was promoted. I used to get WTC that paid almost all my childcare. I thought them starting school would mean I would be better off. Wrong, the salary increase and less hours of childcare means I am not entitled to WTC any longer. Yet I still have to pay approx £250 a month breakfast/afterschool/holiday clubs. Hopefully, I will finally be better off when the kids start secondary school and don't need childcare at all any longer and by then, my salary might have increased a bit again and it will finally all pay off!

Jowo_2

real1314 wrote: »

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.

So perhaps the OP needs to work through the Turn2us online benefits calculator with their employee to actually quantify the impact of the payrise on her benefits.

If it's very different from what she alleges, there are two explanations.

1. She genuinely misunderstood the impact and innocently miscalculated

2. She is better off but its clear that its not enough to incentivise her to use the greater employment income to pay towards her rent! She'd rather work less hours than use her extra wages for her household expenses, such as council tax and rent, that the public purse would ordinarily pay...

What child care does she have? Could it also be the extra charges for this which is deterring her?

Gemstar30

Jowo wrote: »

So perhaps the OP needs to work through the Turn2us online benefits calculator with their employee to actually quantify the impact of the payrise on her benefits.

If it's very different from what she alleges, there are two explanations.

1. She genuinely misunderstood the impact and innocently miscalculated

2. She is better off but its clear that its not enough to incentivise her to use the greater employment income to pay towards her rent! She'd rather work less hours than use her extra wages for her household expenses, such as council tax and rent, that the public purse would ordinarily pay...

What child care does she have? Could it also be the extra charges for this which is deterring her?

Hello,

As good as a suggestion that it is, you cannot ask or even suggest to an employer that they review an employee's benefit entitlements using an on line calculator.

Surely the employer has more than enough to think and worry about!

This employer can do one of three things, sack her, refuse the request or grant it.

Are you seriously expecting employers to give employees 'better off' calculations when offering a salary increase?

That is the job of the experts - CAB, JC+ etc.

What happens next?

A long discussion with the employee on the pro's and con's of taking the award. Come off it - be reasonable

Gemma
x

Emmzi

Thank you all for your input. I'd hate to be a single parent, it's so complicated! That gives me some perspective, and of course if I were her, I'd want as much time with my little un as I could, only natural.

The decision will of course be in line with our family friendly working policy so I'm awaiting her paperwork coming in to see if it's feasible. Her finances are of course confidential to her (just that she did mention benefits and it made no logical sense to me at all.)

Bit depressed the raise I wangled has turned out so badly from my side - had to negotiate a bit for her, and my thanks is losing her a few more hours or week or maybe losing her totally if I can't do it. *Sigh*. It's a problem being the boss sometimes, can't do right for doing wrong

FBaby

you did the right thing and many would have been grateful for it and taken it with appreciation even if it means loosing out some benefits. One, especially a single mum, should feel proud to be standing on her own two feet and not rely on the support of others. I'm a single mum working full-time and getting nothing from my children's dad. It is hard, and yes, I would love to spend more time with them, but the sense of achievement that I get from being independent is making me feel good and I know it reflects on the kids. They are now getting at the age where they can start to understand the notion of hard work and reward and if it means I can be a good role model, even better.

So no, don't think you are doing wrong, many would love to have you as a boss.

CFC

There you go Emmzi, no good deed goes unpunished, I should think as one of the employer pack you'd have known that by now!!

dktreesea

Emmzi wrote: »

Thank you all for your input. I'd hate to be a single parent, it's so complicated! That gives me some perspective, and of course if I were her, I'd want as much time with my little un as I could, only natural.

The decision will of course be in line with our family friendly working policy so I'm awaiting her paperwork coming in to see if it's feasible. Her finances are of course confidential to her (just that she did mention benefits and it made no logical sense to me at all.)

Bit depressed the raise I wangled has turned out so badly from my side - had to negotiate a bit for her, and my thanks is losing her a few more hours or week or maybe losing her totally if I can't do it. *Sigh*. It's a problem being the boss sometimes, can't do right for doing wrong

There's something subtle about the claw back provisions for benefits which means that if you are caught in what I think of as the transition phase, i.e. earning, but having too low an income to come off benefits entirely, you can be at a point where for every extra £1 you earn, notwithstanding that you may only actually get 72p in your hand (e.g. 20% tax rate, plus national insurance, apologies if the figures aren't exactly right - just trying to explain the principle) the clawback is more than £1.

Take housing benefit. If your income is over their threshold (and for most people who are working but on low incomes it will be, once things like child tax credits and working tax credit are included) this is clawed back at 65p for each £1 earned. You're still at this point technically better off, i.e. you are giving 65p back but pocketing 72p, so can afford it.

But if you are also getting working tax credit, and are already earning over the threshold that it starts getting clawed back at, i.e. £6,420 per annum, then the claw back for working tax credit is 39p for each £1 extra that you earn. And this doesn't include clawbacks for things like council tax.

So you can end up in a situation where you have a payrise, like in this case of £3,000, so, say, £2,160 after tax and NI, but you lose in benefits £3,120 for the year, (i.e. £3000 x (0.65 +0.39).

I would think that, now her hourly rate is higher, the only way your employee can avoid being in that situation is to work less hours, so preserving her current take home pay.

The current situation is mad, because the government policies are as if they are saying "well, if you work, we want our cut, say 28% including NI, so you end up with 72p on the pound. But if you don't work, we'll give you £1.04 and not require any contribution back from you."

It's not your employee's fault - it's just the system, the way the claw back provisions for benefits works.

debrag

She must be loosing £250 + a month from her benefits to not be better off, minus tax & in from the pay rise of course. Her work out goings won't have changed.

Emmzi

CFC wrote: »

There you go Emmzi, no good deed goes unpunished, I should think as one of the employer pack you'd have known that by now!!

yes yes, all managers are satan, etc, etc. Well used to that. I do not mind the lack of appreciation inherent with the role (just how it goes, makes the good moments all the more shiney) if I believe I am *actually* doing things which are as good and right as I can make them. Sometimes I fail.

Emmzi

dktreesea - that explains it perfectly, thank you. That's the logic (??!) I was missing!