Why is it that if you have to be working for 16 hrs/week to claim tax credits .......

BAFE

that all the part-time jobs I see advertised are for 15 hours?

Am I missing something. There must be a reason for this.

MrsManda

Because you can claim other benefits such as JSA if you are working less than 16 hours a week.

Jowo_2

I really don't know. I can't say that I've noticed many jobs for 15 hours or less other than those pitched at students.

Perhaps employers are hoping to get someone who actually wants the job for the job itself rather than the benefit top-ups that come with it?

I don't mean this to come across as harsh, it's just that my sister is a manager of a company and she finds that the part-time workers who qualify for tax credits and LHA (16 hours) won't work any extra hours because of the impact on their benefits. (It could also be the case that they have child care commitments but my sister mainly complains about how inflexible they are about overtime due to the benefits they collect which means they earn nearly as much working part-time as they would if they worked full-time, they aren't particularly interested in the job and just want to work the minimum they can get away with to qualify for other benefits).

This means when they hit peak periods or there are staff sicknesses, for example, her colleagues on benefits won't help out with so much as a single extra hour and it affects their operations and customer service standards.

Sixer

Jowo wrote: »

I really don't know. I can't say that I've noticed many jobs for 15 hours or less other than those pitched at students.

Perhaps employers are hoping to get someone who actually wants the job for the job itself rather than the benefit top-ups that come with it?

I don't mean this to come across as harsh, it's just that my sister is a manager of a company and she finds that the part-time workers who qualify for tax credits and LHA (16 hours) won't work any extra hours because of the impact on their benefits. (It could also be the case that they have child care commitments but my sister mainly complains about how inflexible they are about overtime due to the benefits they collect which means they earn nearly as much working part-time as they would if they worked full-time, they aren't particularly interested in the job and just want to work the minimum they can get away with to qualify for other benefits).

This means when they hit peak periods or there are staff sicknesses, for example, her colleagues on benefits won't help out with so much as a single extra hour and it affects their operations and customer service standards.

Just to confirm that a friend of mine runs a convenience store and she organises her employee shifts to come in at units of 5 or 7.5 hours for exactly this reason. The 16-hour rule means that many of her staff would actually lose money if they covered for holidays and sickness.

Jowo_2

Sixer wrote: »

Just to confirm that a friend of mine runs a convenience store and she organises her employee shifts to come in at units of 5 or 7.5 hours for exactly this reason. The 16-hour rule means that many of her staff would actually lose money if they covered for holidays and sickness.

Yes, I believe the 16 hour threshold is a pain for some employers who need their staff to be a bit more flexible.

A document drawn up by Iain Duncan Smith on his proposed universal credit had some examples on it which indicated that those who worked a bit extra than 16 hours basically were no better off because of the loss they incurred with reduced benefits.

So from an employers perspective, the 16 hour tax credit threshold seems to mean that those in receipt of other benefits will resist overtime.

Hammyman

BAFE wrote: »

that all the part-time jobs I see advertised are for 15 hours?

Am I missing something. There must be a reason for this.

Yep - Employers NI threshold also comes into it. Basically if the employee earns less than £110 per week gross, the employer has no NI contributions to pay. Once the employee earns over £110, the employer has to pay Employers NI at 12.8%.

dmg24

Hammyman wrote: »

Yep - Employers NI threshold also comes into it. Basically if the employee earns less than £110 per week gross, the employer has no NI contributions to pay. Once the employee earns over £110, the employer has to pay Employers NI at 12.8%.

This is the main reason - it costs a fair bit more per hour to employ someone for sixteen hours than it does for fifteen.

Sixer

dmg24 wrote: »

This is the main reason - it costs a fair bit more per hour to employ someone for sixteen hours than it does for fifteen.

Surely you mean nineteen hours rather than eighteen? And surely Employer NICs are calculated on wages above the threshold, not on the whole salary. I imagine this is a reason for many, particularly larger, employers to organise their part-time staff's hours in a particular way, but I don't think it has anything to do with tax credits.

dmg24

Sixer wrote: »

Surely you mean nineteen hours rather than eighteen? And surely Employer NICs are calculated on wages above the threshold, not on the whole salary. I imagine this is a reason for many, particularly larger, employers to organise their part-time staff's hours in a particular way, but I don't think it has anything to do with tax credits.

No, I mean sixteen (strictly speaking, 16.5). Yes, employer NICs are calculated on earnings above the higher amount.

Sixer

dmg24 wrote: »

No, I mean sixteen (strictly speaking, 16.5). Yes, employer NICs are calculated on earnings above the higher amount.

Then why are you working it out on employee NICs earnings limits rather than employers NICs thresholds? How would an employee's deductions factor into this?

It's more expensive to employ someone to work for 19 hours and above than it is for 18 hours and below because employers NICs in effect mean you pay someone their hourly rate plus 12.8% for any hours over 18.5-and-a-bit (at NMW).

Nothing to do with tax credits and part-time jobs possibly being set at 15 hours rather than 16. Employer NICs may factor into the setting of part-time hours, as I said, but it's not the same issue at all as setting part-time hours at under 16 hours because staff claiming tax credits won't provide cover hours as they'll lose money.

Jowo_2

Sixer wrote: »

...
Nothing to do with tax credits and part-time jobs possibly being set at 15 hours rather than 16. Employer NICs may factor into the setting of part-time hours, as I said, but it's not the same issue at all as setting part-time hours at under 16 hours because staff claiming tax credits won't provide cover hours as they'll lose money.

The discussion on NICs is very helpful to understand why employers are allegedly reluctant to employ someone on a part-time basis for 16 hours. I wasn't aware of that so that's helpful.

However, hearing my sisters rants about part-timers who won't work extra because of the impact on their tax credits and LHA, plus the posts on this forum from benefit claimants who would like to work longer but identify that it isn't 'worth it' means I do think there is some credibility to this.

There is a wealth of evidence that those who would like to earn more are deterred by the disproportionate impact on their benefits, hence part of the reason why the Tories want to make significant changes to the system.

I do still wonder whether employers who prefer employees to be more flexible about their commitments could try to deter those receiving means tested benefits from applying from them, simply by setting the base hours under the 'magic' 16 hour threshold.