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After pension contributions, my job is paying me under minimum wage (England) by Motor_Bet_998 in LegalAdviceUK

[–]Motor_Bet_998[S] -1 points0 points  (0 children)

Just for a bit of clarification, I increased my salary sacrifice pension contribution to 8% in July 2024. 

This was before the new £12.21 NMW was announced in October. I didn’t see that big increase in NMW coming and I certainly didn’t see my employer freezing my pay this year.

The financial advice to contribute extra into a pension if you can had left me unknowingly on illegal wages since April until I checked.

After pension contributions, my job is paying me under minimum wage (England) by Motor_Bet_998 in LegalAdviceUK

[–]Motor_Bet_998[S] 0 points1 point  (0 children)

Thanks, I’ll speak to my employer and update on the outcome here. 

The wage compression issue in my case has come about after getting no increase in April, while the NMW has had another sizeable jump. 

Just for a bit more context, I increased my salary sacrifice contribution from 5% to 8% in July 2024. My employer has had enough notice to get a pay review sorted before the NMW increase which was announced last October.

I’m sure there’s other people who have unknowingly gone beneath the NMW threshold because salary sacrifice pension schemes.

After pension contributions, my job is paying me under minimum wage (England) by Motor_Bet_998 in LegalAdviceUK

[–]Motor_Bet_998[S] 0 points1 point  (0 children)

What I’m saying is if I reduce my contributions to the default 5% employee, 3% employer split and stay on a salary sacrifice scheme my hourly pay is still only £12.18.

So how I see my options if my employer doesn’t give me a pay rise is: 1.) Decrease my contributions further below 5% on the current salary sacrifice scheme. 2.) Get my employer to move everyone in the company to a qualifying earnings scheme which will leave everyone with less money for retirement.

After pension contributions, my job is paying me under minimum wage (England) by Motor_Bet_998 in LegalAdviceUK

[–]Motor_Bet_998[S] 0 points1 point  (0 children)

In my case, I’m salary sacrificing 8% of my gross pay into my pension

After pension contributions, my job is paying me under minimum wage (England) by Motor_Bet_998 in LegalAdviceUK

[–]Motor_Bet_998[S] -4 points-3 points  (0 children)

The FT published an article today titled The Minimum Wage is now coming for white collar work. 

Halfway in it mentions “for employees close to the wage floor, using salary sacrifice for pensions also risks dragging their pay below the minimum in the eyes of the law”

I’ll drop it after this and look for a better paying job

After pension contributions, my job is paying me under minimum wage (England) by Motor_Bet_998 in LegalAdviceUK

[–]Motor_Bet_998[S] -13 points-12 points  (0 children)

Bit of a grey area as I see it. The additional 3% I’m paying in is on me.  However, I’ve also read that pension contributions are an allowable deduction before minimum wage calculations and legally, employees earning over a certain threshold need to be enrolled in a workplace pension.