Employer hiding behind national Living Wage to prevent perks?

[Skiff85]

Hi, so recently I was sent an email at work advising me that the period in which I can now purchase additional holiday is now open, I promptly logged into the intranet and went to do this and when I clicked the link it took me to a screen that said:

Unfortunately, you are not eligible to buy additional holiday. The reason for this could be because your salary will fall below the National Living Wage, or perhaps you already have the maximum number of days allowed.

So I contacted the department responsible to get some clarification, they responded by telling me:

I’m sorry to hear that you haven’t been made eligible for the scheme.

Our workings show that if you were to buy a day’s holiday, your salary would drop below a standard set to reflect the National Living Wage. As this scheme is a salary sacrifice scheme, we have to ensure that people’s wages would still meet the minimum requirement once all other deductions have been taken, which includes schemes such as pensions.

I asked for a breakdown of how they came to this figure and they said this:

We have your actual salary down as £18,778 per year, making your daily rate £72.22, and your hourly rate £8.11.

With your pension deduction of £137.84 a month, your current hourly rate after the salary sacrifice is £8.06.

After purchasing a day’s holiday your hourly rate would be £8.02.

The minimum requirement we need for the new hourly rate is £8.05. I’m sorry to tell you that you missed out by the small margin, however we have to put these boundaries in place to take into account the increase in the National Living Wage that is due to take place in April.

So normally I would just accept this, but I work a 44.5 hour week and I assume that this national living wage is worked out on a 37.5 hour week as these things generally are. My issue is, if I worked a standard 37.5 hour week on my current salary, my hourly wage would rise to about £9.62, which would put me well above the threshold even though I would not actually be earning any more money per week/month/year. I tried to explain this to them and they just responded by saying they have to adhere to government guidelines. To me, this seems unfair and it feels like my company is hiding behind this like some kind of loophole to exclude me from buying extra holiday. If the national living wage is £7.50@37.5 hours a week it works out at an annual salary of £14,625 which I am well above so I feel penalised based on my hourly rate rather than my actual income.

Have I misunderstood what they are saying or is there anything I can do about this?

[Amethyst]

Re: Employer hiding behind national Living Wage to prevent perks?

https://www.gov.uk/guidance/salary-s...ffects-on-paye

Although doesn't consider in there buying holiday it does say " A salary sacrifice arrangement can't reduce an employee's cash earnings below the National Minimum Wage rates"

I wonder if you can argue reducing your hours in essence by taking a day off ? ( probably too sensible - and the odd doc I've looked at don't seem to work like that - eg. http://www.whsmithplc.co.uk/Recruitm...n11toDec11.pdf )
The calculation for minimum wage on salary is based on your contracted hours - however if you always work 44.5 - that may well be a term of the contract.
It's living wage not minimum wage - which is voluntary - but if that's a term of their salary sacrifice scheme I think you're stuck with it. Do you have the terms of the scheme?

[MENTION=51026]Ula[/MENTION] might know the rules.

[Skiff85]

Re: Employer hiding behind national Living Wage to prevent perks?

I don't have the terms of the scheme

The thing is, it says that the National Living Wage is £7.50 but my HR dept says that my hourly wage would be £8.02 which is below the minimum threshold of £8.05 which I don't understand. I did query this with them and ask how they calculated their figures to reach £8.05 minimum when the current rate is £7.50 and has never risen by more than 50p in a year to which they responded:

When these figures are decided on, they take into account a number of factors. As well as the National Living Wage, we have to account for any other possible rises, such as minimum percentage matching in pensions and so forth. Also, this is one of many benefits that we have to offer and so we have to account for other deductions that may be taken over the course of the next year.

I assure you the amount of £8.05 has been chosen based on a thorough analysis and was a decision that was made by a number of people, not a sole individual.

If there was something we could do to change this for you, we would, however these minimum requirements are in place for the benefit of the employees and their salaries.

I have also asked what if I opt out if the pension sacrifice, which to my knowledge is my only salary sacrifice, and they responded with:

I’m afraid the calculation is taken from the values made available in the November payroll only.

We accept that salaries are subject to change, and so take the figures from a set payroll month only, to avoid any salary/holiday disruption later on in the year.

That response to me seems really vague and it also seems to me like if I was not opted into the pension for November and purchased the holiday, I could opt into the pension again until next November when they would assess it again which just seems dumb.

I honestly don't know why they would want to prevent me purchasing extra holiday but it feels like they do.