Minimum salary requirement

[Telson]

Hi

I plan to pay an employee a graduate(normal employee, not an apprentice or volunteer). I plan to pay the minimum salary.
If I pay per hour £8.91 would that be following current guidelines.
I plan to pay 8.91 x 52 x 40 = 18532
Would that be in accordance with current rules? I plan to give 22 days holidays besides the bank holidays.
Is £18532/annum for 40 hour per week or £9266/per annum for 20 hours per week would be in accordance with the guidelines. I don't want to disobey the guidelines.
I checked the National minimum wage calculator and it shows the amount is in accordance with guidelines.
I don't take any money from the employees salary for anything they require
I don't give them accommodation
They don't work more than the hours specified

Any advice would be helpful

 

[UKSBD]

you can't pay £8.91 an hour and £18,532 a year because you don't know how may hours they will work in the year

Also there is closer to 52.2 weeks in a year

 

[Telson]

Thank you @UKSBD , Assume I pay overtime if they work more than 40 hours any week, would this salary be OK? the national minimum wage calculator shows it is fine, I wanted to double check, could you please tell me the reason you think that salary is not in accordance with national minimum wage. Thanks in advance

 

[UKSBD]

If you want to pay an hourly rate, pay an hourly rate - don't even mention an annual salary

 

[Telson]

Thats an option, but I want to pay an annual salary which should follow the national minimum wage. I want to take someone as employee, hence preferably annual salary. Thank you

 

[UKSBD]

1. You don't know exactly how many hours they will work in a year and if paying exactly minimum wage they may work more hours that your salary allows for.

2. Minimum wage changes every year, have you allowed for that in your calculation?

 

[Telson]

1. I plan to pay them overtime for any hours they work more than 40*52.2 per year
2. when the minimum wage increases, I can increase the salary
would it be OK? what is your opinion, thanks in advance
I am a start up company, and the person joining is a graduate, I won't be getting any output, I consider the initial 4 or 6 months would be just training. And if they leave after a year, I would be in great loss. Hence wanted to offer the lower salary.

 

[Bob Morgan]

Have you budgeted for a 'Revolving Door?'

 

[cjd]

The rules for calculating minimum wage for salaried employees are explained here

https://www.gov.uk/guidance/calcula...hours-for-which-the-minimum-wage-must-be-paid

The critical part is that the monthly hours worked must be stated in the contract.

 

[WaveJumper]

Also add to your list of things to think about:

National Insurance
Auto-enrolment Pension
Holiday Pay
Sick Pay
Maternity/Paternity Pay
National Minimum Wage / Real Living Wage
Employment Contract

https://www.acas.org.uk/pay-and-wages
https://www.gov.uk/employing-staff

 

[Frank the Insurance guy]

As @WaveJumper says, the cost to your business of employing them is far more - so take into account his list when budgeting.

I would add Employers Liability Insurance to his list, which is a legal requirement.

 

[IanSuth]

I took it the OP was basically just saying "how do i ensure I have got my calculations right to not fall foul of min wage legislation" I am sure they are well aware that salary is not all the costs

In general terms your calculations look right, although if i was you I would at least round to £9ph as psychologically it looks a lot higher than £8.91 and for 9p an hour makes it look less like you are trying to get away with paying as little as possible (which if you are employing a youngster matters, as you will get their parents looking over their shoulder at what you are doing)

Also FORGET paying a graduate £9ph

Just look at the sums from their viewpoint - they will have just finished uni owing the govt well over £60k - the tuition fee loan alone is £27750 and the interest on the first £9250 of that started 3 years ago, plus below is the maintenance loan range - you may not be paying them enough for repayments to start but they will be getting the statements showing the interest increasing that loan. If you want a grad you have got to be pay more - so you need to ask "Do I really need a grad ?" - if so pay more or if you have a fixed amount you can afford you need to compromise on your requirement. Otherwise your "grads" at £9ph will be continually looking for a new job and you will be continually training new ones


The minimum Maintenance Loan on offer for students from England is £3,516, which is paid to students with a household income of £58,222 or more and who'll be living at home during their time at uni. The maximum Maintenance Loan is £12,382 and is paid to students who will be living away from home and in London, and whose annual household income is £25,000 or less.

 

[Newchodge]

Hi

I plan to pay an employee a graduate(normal employee, not an apprentice or volunteer). I plan to pay the minimum salary.
If I pay per hour £8.91 would that be following current guidelines.
I plan to pay 8.91 x 52 x 40 = 18532
Would that be in accordance with current rules? I plan to give 22 days holidays besides the bank holidays.
Is £18532/annum for 40 hour per week or £9266/per annum for 20 hours per week would be in accordance with the guidelines. I don't want to disobey the guidelines.
I checked the National minimum wage calculator and it shows the amount is in accordance with guidelines.
I don't take any money from the employees salary for anything they require
I don't give them accommodation
They don't work more than the hours specified

Any advice would be helpful

No the salary may not be enough.

There are more than 52 weeks in every year, so it is too low on that basis.
In addition minimum wage must be paid for every hour worked so even if you multiply 40 by (365/7) you cannot be certain that you have paid for every hour. What is required is to calculate the number of potential working days in the year (presumably Monday to Friday), including bank holidays, and multiply by the number of working hours in each day.

However, the 40 hours figure may not be right. Presumably you are giving them a minimum of 20 minutes break during the day (required by law). However long that break is, do you intend it to be a paid break?

 

[Newchodge]

The critical part is that the monthly hours worked must be stated in the contract.

That's impossible.the number of hours worked each month will vary generally there will be more hours in January that February.

 

[WaveJumper]

As @WaveJumper says, the cost to your business of employing them is far more - so take into account his list when budgeting.

I would add Employers Liability Insurance to his list, which is a legal requirement.

Can't believe I left that one off

 

[AlanJ1]

Also FORGET paying a graduate £9ph

Just look at the sums from their viewpoint - they will have just finished uni owing the govt well over £60k - the tuition fee loan alone is £27750 and the interest on the first £9250 of that started 3 years ago, plus below is the maintenance loan range - you may not be paying them enough for repayments to start but they will be getting the statements showing the interest increasing that loan. If you want a grad you have got to be pay more - so you need to ask "Do I really need a grad ?" - if so pay more or if you have a fixed amount you can afford you need to compromise on your requirement. Otherwise your "grads" at £9ph will be continually looking for a new job and you will be continually training new ones


The minimum Maintenance Loan on offer for students from England is £3,516, which is paid to students with a household income of £58,222 or more and who'll be living at home during their time at uni. The maximum Maintenance Loan is £12,382 and is paid to students who will be living away from home and in London, and whose annual household income is £25,000 or less.

This is a whole load of crap (pardon my language). I am all for paying people what they are worth but there will be a lot of graduates struggling to get a job who would take anything (yes even at minimum wage) to get themselves into work. The OP even mentioned the first 4-6 months will be training, if he sees an employees worth it could easily be raised in wages?

 

[IanSuth]

This is a whole load of crap (pardon my language). I am all for paying people what they are worth but there will be a lot of graduates struggling to get a job who would take anything (yes even at minimum wage) to get themselves into work. The OP even mentioned the first 4-6 months will be training, if he sees an employees worth it could easily be raised in wages?

27 years in recruitment including running graduate recruitment campaigns and father of a son just graduating (who has found a job) and a daughter at uni says not.

If you pay too little then you will be employing someone who is always keeping an eye out for another job, I am not talking about paying £25k+ for a social science grad from a lower tier uni, I am talking about paying enough that you don't spend 4 months training for someone to leave and go to another employer paying £20k+ leaving you back at square 1. Unless you are in an area with very high unemployment or your industry is one with very high barriers to getting experience (such as journalism) you are looking at a false economy trying to employ a graduate on minimum wage, if the job is really worth <£18k why not take a school/college leaver who will be just as eager to learn (if not more so) but won't have £60k of debt to service and a bunch of mates/parents telling them they ought to be earning more.

Name 1 job where you NEED skills/knowledge only able to be gained on a degree but it is not worth paying >£18k for

 

[cjd]

That's impossible.the number of hours worked each month will vary generally there will be more hours in January that February.

It's certainly possible for salaried employee. As it says in the guidance

https://www.gov.uk/guidance/calcula...hours-for-which-the-minimum-wage-must-be-paid

What is salaried hours work for minimum wage purposes?
Salaried hours work can exist in any sector or occupation. Many office workers, public sector workers and workers at large companies are paid on the basis of a salaried hours contract.

If you employ someone to work only during some parts of the year but you pay them an annual salary in instalments throughout the year then they are a salaried hours worker. For example, school cleaning, catering or caretaking staff are often paid a regular weekly or monthly amount throughout the year, although they work in term time only.

Salaried hours work requires all the following to apply to a worker:

• they are entitled under their contract to be paid for a set basic number of hours in a year
• they are entitled under their contract to an annual salary for those basic hours
• they are not entitled under their contract to any other payment for their basic hours other than the salary, or a performance bonus or salary premium (see below)
• they are paid not more often than weekly and not less often than monthly in equal instalments – for example, monthly, 4-weekly, fortnightly or weekly payments. Alternatively, they can be paid in monthly instalments that vary but add up to the same amount in each quarter.

So long as the instalments remain the same, the fact that workers actually work more hours in some weeks or months and less in others does not prevent them being salaried hours workers.

 

[AlanJ1]

27 years in recruitment including running graduate recruitment campaigns and father of a son just graduating (who has found a job) and a daughter at uni says not.

If you pay too little then you will be employing someone who is always keeping an eye out for another job, I am not talking about paying £25k+ for a social science grad from a lower tier uni, I am talking about paying enough that you don't spend 4 months training for someone to leave and go to another employer paying £20k+ leaving you back at square 1. Unless you are in an area with very high unemployment or your industry is one with very high barriers to getting experience (such as journalism) you are looking at a false economy trying to employ a graduate on minimum wage, if the job is really worth <£18k why not take a school/college leaver who will be just as eager to learn (if not more so) but won't have £60k of debt to service and a bunch of mates/parents telling them they ought to be earning more.

Name 1 job where you NEED skills/knowledge only able to be gained on a degree but it is not worth paying >£18k for

Have hired 2 Juniors straight from university as grads on 20k, both with same company 4 and 5 years later after proving themselves. Countless friends (One who has just been promoted who was on 19.5k and now 28k after 9 months).

I think I may have miss-understood you, if you are going to pay minimum wage for the eternity of the job then 100% the staff will be looking for something on a weekly basis. If you have someone on a grad program/training and move them when they prove there worth then more incentive to stay.

Have seen countless people straight from university who when you put them into real life application completely crack under the pressure - I guess it would be awful to pay a good wage and lose that as well as the time.

 

[Newchodge]

It's certainly possible for salaried employee. As it says in the guidance

https://www.gov.uk/guidance/calcula...hours-for-which-the-minimum-wage-must-be-paid

What is salaried hours work for minimum wage purposes?
Salaried hours work can exist in any sector or occupation. Many office workers, public sector workers and workers at large companies are paid on the basis of a salaried hours contract.

If you employ someone to work only during some parts of the year but you pay them an annual salary in instalments throughout the year then they are a salaried hours worker. For example, school cleaning, catering or caretaking staff are often paid a regular weekly or monthly amount throughout the year, although they work in term time only.

Salaried hours work requires all the following to apply to a worker:

• they are entitled under their contract to be paid for a set basic number of hours in a year
• they are entitled under their contract to an annual salary for those basic hours
• they are not entitled under their contract to any other payment for their basic hours other than the salary, or a performance bonus or salary premium (see below)
• they are paid not more often than weekly and not less often than monthly in equal instalments – for example, monthly, 4-weekly, fortnightly or weekly payments. Alternatively, they can be paid in monthly instalments that vary but add up to the same amount in each quarter.

So long as the instalments remain the same, the fact that workers actually work more hours in some weeks or months and less in others does not prevent them being salaried hours workers.

Yes, but you said "The critical part is that the monthly hours worked must be stated in the contract." That cannot happen. Weekly hours to be worked can be stated, daily hours to be worked can be stated, and should be in the contract. Monthly pay can be stated if someone is on an annual salary (although there is no need to state anything other than the annual salary) but the contract does not need to, and indeed cannot, state the hours to be worked monthly.

The reason is that a day is an absolute period, a week is an absolute period, a month is a variable period

 

[IanSuth]

Have hired 2 Juniors straight from university as grads on 20k, both with same company 4 and 5 years later after proving themselves. Countless friends (One who has just been promoted who was on 19.5k and now 28k after 9 months).

I think I may have miss-understood you, if you are going to pay minimum wage for the eternity of the job then 100% the staff will be looking for something on a weekly basis. If you have someone on a grad program/training and move them when they prove there worth then more incentive to stay.

Have seen countless people straight from university who when you put them into real life application completely crack under the pressure - I guess it would be awful to pay a good wage and lose that as well as the time.

£20k 4 or 5 years ago is not the same as £18k today (in fact it is £22356.19), that was my point, also Sep 2012 was the first yr the new £9 tuition fee came in so if it was actually earlier than 2015 those grads wouldnt have had £27k of tuition fee debt)

I think £22k would be fair starting salary today for a grad trainee with no placement experience and in a non specialised area - I don't think £18.5k is (which is what the OP was suggesting) as that is over £45 a week less take home despite every other cost having risen (especially housing)

 

[cjd]

Yes, but you said "The critical part is that the monthly hours worked must be stated in the contract." That cannot happen. Weekly hours to be worked can be stated, daily hours to be worked can be stated, and should be in the contract.

Ah ok, you're correct, thank you. I should have said that "the critical part is that hours to be worked must be stated in the contract."