Some Greggs employees will receive only a fraction of the one-off bonus the bakery chain plans to award them due to universal credit rules.
While the company announced it would be investing £7m in a reward for staff following a successful year, experts warned that employees on universal credit may not receive the full £300 bonus they are expecting.
This is because the bonus will put their salary for that month over the “work allowance” – the amount employees can earn without the Department for Work and Pensions reducing their universal credit payments.
The Guardian reported that a worker with wages below the tax and NI threshold of £8,632 per year would likely receive just £111; an employee earning between £8,632 and £12,500 would receive £98; and someone earning more than £12,500 would get £75.
The number of Greggs staff on universal credit is not known.
Just asked my Greggs inside informant if everyone is chuffed about their ~£300 bonus?
“Not really. Most of us are on Universal Credit. We’ll get the bonus end of Jan & it will be taken out of our UC payments in March. They’ve basically just handed £7m back to the govt.”
Fuck.
— Ally Fogg (@AllyFogg) January 8, 2020
Torsten Bell, chief executive of the Resolution Foundation, told the Guardian: “While workers on universal credit could lose up to £225 of their £300 cash bonus, that is an argument for the government to lower the taper rate in universal credit, rather than for employers to stop paying their staff more.”
DWP advice on how bonuses affect universal credit payments states that: “In most cases bonuses will be assessed along with the salary and, depending upon the individual’s circumstances, could reduce their benefit for that assessment period.”
The TUC general secretary, Frances O’Grady, said: “This is another example of how universal credit is failing working people. The government needs to come up with fresh plans to give low-paid workers better support, and fairer incentives and rewards.”
Greggs has been approached for comment.
This is not because of Universal Credit at all. Its simply the fact that a bonus is being paid through wages and therefore is subject the normal tax and benefit requirements. Of course if someone has earned £12,500 in the year and they then earn another £300 then that will have tax taken from it. If the bonus is being paid through normal PAYE then it comes down the same as extra hours. Its also always been the case that if you’re on benefits and your earnings increase then your benefits reduce, because well benefits are paid because you aren’t earning enough! You can’t expect to earn more but still keep your benefits the same, why would you expect that? My question is how on earth are “most” Greggs staff on Universal Credit? Do Greggs only employ on low part time hours?
It isn’t clear whether these workers did extra hours and were paid for those at the usual rate; or were ‘gifted’ £300 which should have been given separate to their pay, and would then not be pay.