Paid less than minimum wage after salary sacrifice.

BoGoF

How does salary sacrifice affect redundancy? i.e. would any redundancy be based on your post sacrifice salary and you would maybe be better increasing this?

System

6022tivo wrote: »

The above I read with interest.

Dodging tax and NI sounds like it's a bad thing. It's not is it, I'm building up a pot so I don't have to rely on the state in later life to look after me. It's the whole idea of salary sacrifice isn't it?

I've been here 10 years, they are becoming a ruthless company to work for, sacking and firing at the moment, and redundancies. The bankers have moved into the board and don't care, so my moral compass is not really too bothered about the company.

I did not picked a figure to get them into trouble. My maths may be wrong. I'll come to that in a minute.

£924 a month is what I get paid.
I work 28 hours a week.

My maths is Annual - £924 x 12 = £11088
Hours 28 x 52 = 1456

11088/1456 = £7.62



Alternatively National Wage is £8.21
So £8.21 x 28 x 52 = £11953 Should be my annual Wage, not the current £11088


These are rough maths, I'm not taking into consideration my 9 bank holidays and 20 days annual leave so not sure how this can make a difference? However I don't think it should?

Holidays are not included in the calculation of the minimum wage:
https://www.gov.uk/minimum-wage-different-types-work?step-by-step-nav
You are not being paid less than the minimum wage.

6022tivo

Fantastic. I will sleep at night.

Just done the calculation minus the annual leave and BH and indeed I'm over just. Many thanks.

bowlhead99

6022tivo wrote: »

Fantastic. I will sleep at night.

Just done the calculation minus the annual leave and BH and indeed I'm over just. Many thanks.

Ah, the old 'it was a fuss over nothing' outcome

FWIW, I wasn't suggesting it was fundamentally bad to 'dodge' tax and NI by legitimately structuring your pay package so that not much tax is payable. It's our god-given right and duty to use smart planning to only pay the bare minimum we need to, and dodge as much as much as possible.

Just that if you are legitimately able to 'dodge' tax because of some action you took, you shouldn't take the pee by then dobbing in the person who helped you to get the result you wanted and starting a compensation claim for being paid too little.

quirkydeptless

BoGoF wrote: »

How does salary sacrifice affect redundancy? i.e. would any redundancy be based on your post sacrifice salary and you would maybe be better increasing this?

It doesn't under the terms of my contract of my employment, but each individual should indeed check this.

Aretnap

Never mind the minimum wage. If you're salary sacrificing yourself to below the personal allowance (currently £12500 pa) then you're likely throwing your money away as you don't save any income tax below that level - nor do you get any tax relief on salary sacrifice contributions. You would likely be better off sacrificing yourself down to £12.5K pa, then making further contributions in the old fashioned way and getting them topper up with tax relief.

This calculation may be more complicated if you have other sources of taxable income besides your job (in which case it's your total income which you don't want to go below £22.5K) or if your employer tops up your pension with the employer's NI that they save (in which case they're not the worst employer in the world)... but you should make sure you factor this into your calculations.

6022tivo

I agree with regards to the £12500. Couple of errors on my behalf.
Have to give them a percentage to salary sacrifice, but this is after I take of the Lower Earning Level, LEL or something like that. Is about £5-6k?? I messed it up a little.
I had to set my percentage at the beginning of the year.
I was expecting a larger pay rise this year.
I normally earn 1k from another employer.
I earn more than 1k from savings accounts that are taxable current accounts and Regular Savers. Thought I was under before getting a letter from HMRC and because of this they have adjusted my TAX code this year anyway to less than 12500.




To Add.. My company pay a further 10% into my pension (Before salary sacrifice). They also pay the NI Employer savings into it (Which I understand they don't need to).
We'll see how long it lasts under the new management.