Taking money from minimum wage to fund your own holiday entitlement?

[verdantverdure]

Hiya Mumsnet.

My nephew has started a new job on a few pence above minimum wage. It’s PAYE and everything. (In his last job they justified paying him less than minim wage because they would “pay his tax for him”.)

In this one they apparently will take £1 from every hour he works and put in in the fund that he can draw on when he wants time off. So essentially he’s paying for his own holiday entitlement.

We eagerly await his first payslip but Has anyone ever heard of this?

Contact HMRC - they can’t pay less than minimum wage and taking £1 an hour from his wage will mean he falls below.

Sounds dodgy to me. What does his contract say?

That's ridiculous.

I’d say that’s an unlawful deduction from wages.

Im almost 100% sure that’s illegal. Employees are entitled to a minimum holiday entitlement PAID and for no reason can their wages be reduced down below the legal minimum

not legal if it falls below NMW, no!

How old is your nephew? If he ia young, they might be paying above minimum wage for his age whoch would affect legality: https://www.gov.uk/national-minimum-wage-rates.

Holiday accrual is 12.07% of wage; it is not deducted from salary, so salary could have been stated with the inclusion of holiday pay but that would have to have been stated very clearly and not fall below minimum wage for his age.

If it takes him below NMW then it's illegal. Holiday pay is extra, it's not something you deduct.

Definitely contact HMRC

100% illegal. He has a legal entitlement to minimum wage plus 5.6 weeks paid leave (can include bank holidays).

@verdantverdure On the face of it, I believe it's illegal, but are you sure that your nephew has understood correctly?

My son changed jobs a few years ago and his new employers offered overtime on a regular basis. He also got holiday pay, when he was on holiday, but as the job was in construction, the holidays were all taken at the same time, while the place closed down. So fixed holidays.

He was allowed to 'bank' some of the overtime hours, rather than being paid for them - up to a credit of 90 hours. It was up to him how much to bank and how much to get paid when he did the overtime. The idea was that if he needed time off at any other time - in an emergency, or if weather conditions prevented him getting to work etc etc. He could still be paid for those 'extra days' from his accrued hours.

Could it be something along those lines and he has misunderstood?

It’s certainly possible, but he says he was told that £1 from every hour he works will be put in a fund for him to draw on when he wants to take time off.

Call ACAS and they can advise, I know I had it about 20 years ago when I was temping but that was well above minimum wage.

It sounds highly suspect. Are they a legitimate business? It sounds like they resent paying NMW or ‘above NMW’ and are clawing it back.

When u was a temp about 20 years ago they would not give you holiday entitlement but pay you extra per hour but I don't think this is the case here?

They’re not paying him any extra. They are subtracting money from his hourly rate.

Laws have changed in the last 20 years.

Honestly the way employers treat young people is shocking. My DD worked for a company where they all had to go in after hours for mandatory training 7pm - 10pm. The training over ran to 10.45pm. When she got paid they had only paid for 2 hours. When she queried this apparently the first hour was a meeting so they didn’t need to pay them!

Definitely contaxt HMRC they are paying below minimum wage.

When you say "a few pence" over minimum wage, how many pence?

It would be legal, in a minimum wage job, to pay the employee effectively for 1.107 hours for each actual hour worked, with the 0.107 hours (6.5 minutes) being "holiday pay" - in casual/temp jobs you might never actually officially take "leave" but you will have had the pro-rata paid leave you are entitled to. So if the wage was at least 10.7% over minimum wage and the deduction just reduced the amount back to min. wage that wouldn't be illegal. But that's clearly not what is happening here.

Have you seen a pyslip? How is it shown on there?

What industry is he in?

So what is his current hourly rate before the deduction is made and how old is he?

He's entitled to NMW for all the hours he's required to attend work plus he's also entitled to statutory paid annual leave in addition to this.

He's also entitled to a pay slip showing appropriate deductions which the £1 an hour 'holiday fund' is not. He'd probably do well to register with HMRC and check that his employer (and the previous one) are indeed 'paying his tax for him'.

I'm sure it's a misunderstanding and will be rectified by his payslip. It's usually his rate is higher and taken off that - leaving him with NMW. I used to do agency work a long time ago, but I'm sure they still work to the same provision of holiday is accrued for every hour worked. My rate was £10.50 an hour but it would be put as £12.00 (or something) as the holiday was calculated by this.
They don't word it as 'you are getting £12 an hour minus holidays'.

Pretty sure that's not allowed.

I worked somewhere that paid your holiday entitlement monthly alongside your wages and so if you took time off you didn't get paid.

I've also worked somewhere that offered to take an amount out of your wages before you got them and save it for Christmas, minus a small admin fee - but that was of course voluntary but I'm wondering if he's misunderstood and they do something like that for holidays?