Overtime payments now gifts from catalogue legal??

[justasking111]

Asking for a friend his company newish owners with a number of outlets nationally, have always asked for overtime. But now it's goods in kind from their catalogue. They weren't warned before hand so they're unsure if it's legal they're used to payroll sorting out tax etc. They don't even want the catalogue stuff

How do HMRC assess this. Would they get into trouble if they did accept anything

Sounds a bit dodgy. Not that I'm a tax expert so I don't know if it's legal. If I do overtime I want paying in money thanks!!

What does their contract say? Sounds very dodgy.

What sort of value of goods are we talking here? Tax and NI is payable above a certain level. But I'd say the employer is on very dodgy ground. Clearly they're taking the piss if their employees are paid by the hour.

They're a national company in the leisure industry, so the catalogue items are leisure based. They're paid by the hour and a flat rate for one off specialist jobs.

There are a number of issues:

Generally speaking, all income is taxable, even if it comes in the form of a benefit (whether that benefit is a company car, medical insurance, or goods the company produces). Some specific benefits are exempt, but effectively being paid in catalogue vouchers (I assume this is how they're doing it?) wouldn't be.

National Minimum Wage compliance - does this knock their overall hourly rate (in cash) below NMW? People on low wages often can't even access salary sacrifice schemes that they want due to the fact it's put them below NMW threshold.

And the company are probably breaching contract. I assume the employees have a contract that covers overtime payments? They need to look at their contract and take legal advice.

The company are cheeky as fuck and will soon find themselves with no-one willing to work overtime.

they are still a benefit I reckon but he needs to speak to HMRC as they are avoiding Ni as well as tax so need to clear that up.

The simpple solution is to not do any overtime - sorted.

Regadsing the tax element - the compay could well be paying the requred income tax for the employees. Or they might not, who knows.

The most important issue is that the employees have not consented to be paid in goods/vouchers, and it doesn't sound like it's in their contract. If the company is breaching the employment contract, there is obviously a legal issue.

(Apologies for typos!)

You are still taxed on 'gifts', i.e. payment in kind.
They still need (as a company) to declare that amount as given to employees. It won't save them any tax money.

Could be to resolve a cashflow issue though?

Just checked the contract situation. They give temporary contracts. If you refuse to sign you're then offered an interim contract. And no I've no idea why

What does the contract actually say about overtime pay? Rates, method of payment etc.

Friend can contact ACAS for urgent assistance with this

They need to check the contract but this sounds very dodgy.