To be unsure whether this is fair or not - Greggs bonuses?

[coffeeforone]

I realise that it will only be a small proportion of Greggs workers who are unfortunate to fall into the 'will only receive £75 out of £300' category due to the tax and loss of universal credit, but I'm quite torn on whether this is fair or not?

www.bbc.co.uk/news/uk-politics-51208542

Tax aside, of course UC will be reduced for if they are paid more, that's how the system works, it seems unfair at an individual level but the system overall I don't think is unfair.

E.g. If the same individuals worked enough overtime to earn an extra £300 then that would be the same outcome? Why the headline about bonuses?

I agree there's nothing unusual going on, so it's surprising this is in the news.

I do think though that we should have a rule that everyone gets to keep at least 50% of every extra pound they earn. This rule would help both high and low-earners. The very high-earning minority would gain some protection against being expected to pay for everything the majority wants politicians to spend money on, and people on benefits won't suffer these high withdrawal rates.

I'd even go so far as to say there should be one rate for everyone. All income over the personal allowance taxed at the same rate, probably somewhere between 40% and 50%, and that same rate used for UC clawback.

(When you combine all NI into income tax, employees are taxed at nearly 40% on income in the basic-rate band, so those high-sounding rates aren't necessarily worse, especially if combined with a higher tax-free allowance for both tax and NI.)

U.c is government money paid out so people can make ends meet, it’s paid regardless of whether you get the bonus each month

What about greggs paid a living wage every month so their employees don’t need to claim UC

I'm always surprised how little commentary there is on this topic when the minimum wage rises.

If people working full time, need help from the government, to make ends meet, therein lies the issue.

Gregg's isn't a small company. It should pay a decent wage.

I’m sure I read that greggs pay above min wage but obviously someone’s hours could be low.

The PM appears to have said they should be allowed to keep it, which makes no sense at all, I can only imagine he didn't understand the question How can you have a bespoke tax/benefits system for different sets of employees?

Agree, Greggs should be paying their staff properly in the first place.

But, yes a large part of it will be that they employ a lot of PT women workers

U.c is government money paid out so people can make ends meet, it’s paid regardless of whether you get the bonus each month

In the month when the bonus is paid, the UC will be reduced to reflect the shortfall. The calculations are in the BBC article the OP linked to:

Someone earning £12500. On the £300 bonus they would pay £60 income tax and £36 of national insurance, so £204 would go in their bank account.

If they were receiving universal credit, that would be reduced in line with the taper rate, which means they lose 63p in benefits for each £1 they earn. So they would lose £128.52 of their benefits.

That means that the £300 bonus would only have left them £75.48 better off.

Gregg's isn't a small company. It should pay a decent wage.

Gregg's pay above minimum wage, they also champion staff progression and tend to promote from within (DB used to work in their marketing dept).

'shortfall' should say windfall.

why just greggs, why single them out, the same system will affect anyone who gets a bonus

You could say that for literally any part time worker claiming UC - benefits are for people who NEED them. It's a sign that UC is actually working as intended that they get to keep some of the bonus rather than lose out completely.

Pressed post too quickly - a progressive benefits system must have a tapered earnings rate, rather than a cliff-edge between working an extra few hours or not bothering because it doesn't pay. UC actually makes work pay, although know there are issues around monthly payments that need sorting.

This is the system, the system is there to help. I don’t think you can pick and chose the best bits to suit your circumstances month by month. Every other months claimants are getting something for nothing. It’s only right the rates are applied, it’s not like they make it up as they go along.

They could get their bonus paid into their pension and then keep 100% of it. I'm a lawyer but a single mum on part time hours so I claim UC to make ends meet and I get any bonuses paid into my pension because it's simply not worth the increased tax plus huge loss of UC to get them paid to me. It is what it is. I'm enormously grateful to the UC system and the help it provides to me whilst my son is young.

In the month when the bonus is paid, the UC will be reduced to reflect the shortfall. The calculations are in the BBC article the OP linked to:

So the UC fluctuates with earnings, as earnings/wages go up then UC goes down, then as wages go down UC goes up. Meaning that a family is not worse if in the leaner months

But that also means that in the months when more money is received in income less UC is paid

I don’t understand what the issue is? Taxes, same as everybody. Less benefits because they earn more, isn’t that the point of benefits? To make up for no/low earnings? So why would they keep the same benefits when they receive a higher pay?

If they're claiming universal credit it's only right that their UC is reduced for the month where they receive more money IMO.

Anyone else who gets a bonus is taxed proportionately so why should this be any different?

They'll still get a bit of extra cash in their pocket.

Everyone gets taxed on their bonuses

My DP got a £1000 bonus for working on a particular project last year. He was the project leader and had actually done the lion's share of the work, but everyone working on the project was awarded the same bonus. Except for DP it tipped him into 40% tax territory so the juniors on the team, on basic rate tax, took home considerably more. That felt unfair to him. Same thing as this I suppose, apart the Greggs bonus is "unearned" i.e. paid because the company did well, and not for an individual's hard work.
It does seem crazy that Greggs (and other big companies) are effectively subsidised by UC payments to get away with paying their staff low wages, so perhaps it's only fair that the govt get to claw back some cash this way?

I work for Wetherspoon and we get monthly and quarterly bonuses.
These bonuses do depend on staff performance.
I'm on UC and it's the same for me everyone gets all excited if it's a good one but I just get most of it taken back from a UC anyway. It does feel a bit depressing but just the way it is.

It's not just Greggs it's the same for everyone.

It’s the same for everyone and it’s only right.

It does seem crazy that Greggs (and other big companies) are effectively subsidised by UC payments to get away with paying their staff low wages

Many Greggs staff are part time, hence the UC claim. As said above, Greggs pay more than NMW. The UC claim is because they don't work 40 hours per week - if they did, their UC would be a lot less.

I know some people will stick their fingers in their ears and refuse to listen, but a lot of part time workers keep their hours/wages low so that they keep their benefits, not just UC, but also rates relief, housing benefit, free prescriptions, free school meals, etc. Some even refuse overtime and promotions as it would affect their benefits.

We need a much smaller "taper" system for both benefits and tax so to get rid of these disincentives for people to better themselves. The tax system is just the same - some people suffer a whopping 62% tax rate on their earnings over £100k - it's just not worth it for some people who cut their hours back, i.e. GPs going part time to avoid that punitive 62% rate.

Both tax and benefits removal need to be restricted to 50% so people working more never lose more than half their extra earnings.

If the £300 is a yearly bonus then maybe it would be fairer to spread the bonus over several months to combat this as UC seems to only care about how much you earned in a month rather than the yearly amount.

It's definitely "fair" in that the Greggs bonuses are being treated exactly the same as any other bonus or income for any other person/company.

Whether you think it is fair to tax bonuses is another question. If bonuses were not taxed, they'd be used to avoid paying tax, in that companies would pay small salaries and large bonuses.

Whether you think the UC penalty of 63p per pound earned over a threshold is fair is another question again. I can personally see the reason for reducing benefits as people earn more money; benefits are supposed to top up salary to a level that supports people to live, not to be "free money" on top of whatever is earned. I don't know whether 63p is the right number, or whether there better ways of doing it.

Dh was talking about this with a politician recently (Not the greggs bit but the principle)

Her response was that people on NMW are lazy and dont want to work

Which was nice