Share this content

NIC thresholds - two employments

NIC thresholds - two employments

Didn't find your answer?

Can anyone explain how the PAYE system ensures that an employee with two part time employments, say earning just over the Primary Threshold in one but just below it in the other, pays the right amount of NI overall?  Not a director. 

Replies (47)

Please login or register to join the discussion.

avatar
By onicholson
26th Sep 2014 13:35

Aggregation

If the employments are connected, the NI is aggregated:

http://www.hmrc.gov.uk/payerti/employee-starting/special-situations/mult...

 

If the employments are from two unconnected employers, the 'right amount of NI' is simply the NI paid in one job plus the NI paid in the other, which isn't the same as if the employee was earning the same gross pay from a single employer. There's nothing like the tax system to combine the two, unless aggregation is applicable.

Thanks (2)
By johngroganjga
26th Sep 2014 13:51

Thanks.  It seemed too good

Thanks.  It seemed too good to be true.

Thanks (0)
RLI
By lionofludesch
26th Sep 2014 14:11

No

It's definitely true.

Presumably it's because NICs aren't a tax.

Thanks (0)
Replying to legerman:
Euan's picture
By Euan MacLennan
26th Sep 2014 14:29

Ho Ho Ho!

lionofludesch wrote:

Presumably it's because NICs aren't a tax.

Thanks (3)
RLI
By lionofludesch
26th Sep 2014 14:34

Just kidding .....
..... obviously. :-)

Thanks (1)
avatar
By Anthony123
26th Sep 2014 15:25

It's not "too good to be true"

if the only way you can get work is say to take 3 part time jobs each paying less than the threshold - maybe each at 5k pa - in contrast to having one job paying 15k.

You are then unable to build up an NI record - unless you are clued up enough and can afford to pay class 3.

 

 

Thanks (0)
avatar
By Sherman Holter
26th Sep 2014 15:45

Or Class 2

Or register as self employment in some business that makes £1 profit per year and pay the Class 2

Thanks (2)
Replying to Wilson Philips:
RLI
By lionofludesch
27th Sep 2014 10:38

eBay

Sherman Holter wrote:

Or register as self employment in some business that makes £1 profit per year and pay the Class 2

You don't need to make that much. A perennial loss is fine.

Buy and sell stuff on eBay.

Or sell cars like Chris Moyles.

Thanks (0)
By johngroganjga
26th Sep 2014 17:06

My example was where one job paid over the threshold and the other slightly below.

So the employee does get an NI record but benefits from two NI free bands.

Thanks (0)
avatar
By zebaa
27th Sep 2014 12:38

A perennial loss is fine.

Hmm...I think not quite. There has to be some expectation of profit, though I think the last line, about Chris Moyles is thought inducing. 

Thanks (0)
Replying to lionofludesch:
RLI
By lionofludesch
28th Sep 2014 14:28

Tax v NI

zebaa wrote:

Hmm...I think not quite. There has to be some expectation of profit, though I think the last line, about Chris Moyles is thought inducing. 

For income tax loss relief, yes.

For Class 2 NI, I don't agree.

Thanks (0)
avatar
By eddie the eagle
29th Sep 2014 11:57

HMRC don't Understand National Insurance
CWG2 (2013 / 2014) says: 65 An employee has two or more jobs with different employers and each one pays the employeeIf an employee has another job or jobs with a different employer or employers, work out NICs in the normal way on the earnings you pay the employee. Ignore the payments made to the employee in the other job(s). If HMRC had designed RTI (as opposed to throwing it "together") they would have handled this with ease. Given that one of the objectives of RTI was to "join-up" employments for more accurate PAYE coding. Only an idiot would have ignored NI. Eddie folds his arms ...

Thanks (0)
RLI
By lionofludesch
29th Sep 2014 12:08

Confidential

Why should one employer need to know what the other employer is paying ?

You get the same problem with Childcare - the amount you can pay depends on the employees salary from he job he has with you.

Thanks (0)
Replying to nic1995:
By johngroganjga
29th Sep 2014 12:12

Logically ...

lionofludesch wrote:

Why should one employer need to know what the other employer is paying ?

Logically in order to ensure that employees on the same earnings always pay the same NI, which is arguably what a rational and fair system should ensure, but which it seems ours does not.

Thanks (0)
Replying to nic1995:
avatar
By onicholson
29th Sep 2014 12:40

Fair

johngroganjga wrote:

Logically in order to ensure that employees on the same earnings always pay the same NI, which is arguably what a rational and fair system should ensure, but which it seems ours does not.

 

There's a reasonable argument that NI should work like tax, with an ongoing cumulative calculation and split allowances. The current aggregation rules are onerous for anyone involved and couldn't work across independent employers. However, NI has a great many rules and exceptions, and I imagine any simplification or unification would simply lead to all the NI complications being moved into income tax, which is (in payroll terms) relatively straightforward by comparison. I can't imagine many politicians willingly stepping into the minefield of NI with such sweeping changes and potentially increasing the NI (definitely not a tax) for a part of their constituency, particularly those over state retirement age.

When RTI was first being discussed, HMRC did mention the concept of centralised deductions. You submit the employee's gross pay to HMRC and HMRC tell you how much to pay the employee in net pay. Multiple employments would be immediately handled just like a single employment, with all the correct allowances and deductions at all times. Net pay could similarly be handled by submitting the intended net pay.

It didn't get very far, for obvious reasons, but it would have been a very interesting answer to some of the problems around multiple employments. I suspect that making a system like that work would involve such a massive change to employment and payroll practices that it will never be possible directly.

Thanks (0)
Replying to nic1995:
RLI
By lionofludesch
29th Sep 2014 12:41

Other priorities

johngroganjga wrote:

lionofludesch wrote:

Why should one employer need to know what the other employer is paying ?

Logically in order to ensure that employees on the same earnings always pay the same NI, which is arguably what a rational and fair system should ensure, but which it seems ours does not.

Well, we manage it for PAYE without disclosing confidential information but I agree with you, John. To a point, at least.  

Yet I feel that there are more important issues out there such as returning to a bit of tax neutrality between companies and unincorporated businesses.

Thanks (0)
paddle steamer
By DJKL
29th Sep 2014 12:23

Split employments and Auto Enrolment downsides

 

One of the effects of individuals having split employments is they may end up with no employer pension contributions under the new regime, with both employments below the level where the employer is compelled to offer a contribution.

I currently have this issue with a small after school club of which I am treasurer, of our 6 employees only 2 would qualify for any contribution if we were to set the scheme up using the minimum thresholds required and the other 2 would have very limited contributions. 

We, as a charity and not having a profit motive, have taken the view that contributions will need to be on all salary and we will make them 100% employer contributions to avoid our staff having any incentive to opt out. 

I am at a loss with this legislation to understand why it is framed in such a way that those most likely to have no private pension provision are those least helped by the legislation.

Thanks (0)
avatar
By pauljohnston
29th Sep 2014 13:37

@onicholson

I quote from your text   "Multiple employments would be immediately handled just like a single employment, with all the correct allowances and deductions at all times. Net pay could similarly be handled by submitting the intended net pay."

This is wishful thinking.  HMRC cant even do this for PAYE and generally disadvantage those who earn less than the personal allowance - students for instance.

Thanks (0)
By cfield
29th Sep 2014 13:47

a) Pensionable earnings b) NI rebates

Some posters appear to be under the impression that no NI means no accrued rights for State Pension. Not so. To clock up a year for State Pension, you merely need to earn £111 per week in a single employment (the Lower Earnings Limit) or pay Class 2.

You only pay Class 1 on earnings in excess of £153 per week, so if you have 3 (unconnected) employments, you could earn up to £459 per week without paying NI, whilst still qualifying for State Pension. It was Gordon Brown who made this rather odd state of affairs possible when he abolished the old £2 per week "entry fee".

The employee gets to have his cake and eat it here, because he can claim an NI rebate if he pays more over 2 (or more) employments than he would if he'd earned the same in a single employment. That could happen of he earns more than £41,865 overall, as his NI would then be 12% in both jobs rather than 2% on the excess had it been a single salary.

Going slightly off-topic, I discovered recently that HMRC Online doesn't recognise losses brought forward for Class 4 NI if they come from a different trade (as would happen if you were a sole trader in one business and a partner in another). According to NIM24610 "a trading loss is to be relieved for NIC purposes in the same manner as for Income Tax", so you can offet losses from any source, yet HMRC Online failed to do so for one of my clients.

I wrote to HMRC pointing this out and got a rebate plus interest and compensation. I don't know whether they've fixed it yet but apparently some commercial tax software products have this glitch too, so definitely worth checking if you have clients in that position.

 

Thanks (0)
avatar
By dmmarler
29th Sep 2014 14:41

Much simpler if employees' NI was combined with tax

Why don't we do things simply - combine the employee NI contribution into tax?  NI is dreadful for the low paid who don't pay tax but do pay NI.  We can get rid of the directors' NI system as well (another complex area to explain to clients).  There are umpteen scenarios where the whole system is completely unreasonable, besides the different rules and rates which change every year and which even HMRC systems fail to grasp.

Thanks (1)
Replying to Red Leader:
By cfield
29th Sep 2014 15:11

NI for the low paid

dmmarler wrote:

Why don't we do things simply - combine the employee NI contribution into tax? 

Because NI was never supposed to be a tax in the first place.

Why shouldn't low earners pay NI? After all, they expect a state pension when they retire.  Why should they ponce off the rest of us? Low earners are already getting a very good deal with the new flat rate state pension, unlike high earners.

The NI system has already been watered-down so much that the link between contributions and benefits (which underpinned the whole scheme originally) has now been almost completely eradicated. For decades now, the less you put in the more you get, and vice versa.

Untiil a few years ago, you didn't pay NI above the Upper Earnings Limit for the very good reason that your pension rights were capped at that limit. Then Gordon Brown introduced the 1% rate, so you started paying something for nothing, then it went up to 2%. Now you propose doing away with it altogether.

Merge NICS with tax? Pensioners are going to love you! They've already paid into the system once - why should they pay any more?

As for director's NI being too complex to explain, you're an accountant (I presume) aren't you? That's what your clients pay you to do. Perhaps you're not explaining it properly.

If I had my way, I would bring in another class of NI - to be treated as a tax as you suggest. It would go to pay all the state benefits/pensions (including these so-called Tax Credits which have nothing to do with the tax you've paid) for all those people who pay NOTHING into the system.

Then, I would reserve the existing classes for people who DO pay NI, linked 100% to contributions as was originally the case, and invest them in a properly funded system guaranteed by the Government.

That way, we could see exactly how much we are paying for our own pensions/benefits and how much we're forking out for other people. Or would that be too incendiary? Might stir up a few hornets nests I think!

Thanks (0)
Replying to runningmate:
avatar
By dmmarler
29th Sep 2014 16:05

more complexity!

Precisely, the links between contributions and benefits hardly exist.  On the other hand, taxpayers are in and out of employment/self employment/part time/full time, etc., so the dear old NI system is no longer fit for purpose but the tax system catches up with most things. 

Pensioners? Bring back an age allowance from - say 70 - and provide them with proper P60s from the DWP every year. 

Directors' NI? We tell one client every year about the way it is calculated but he still forgets, yet others are fine!  Some people are not so good with finances so they instruct accountants who patiently go through it with them every year.

The Tax Credit system is a complete nonsense, and should be abolished.  What would help is having fully transferrable allowances between husband and wife (as suggested c 1974 and thereafter), whereby if one spouse does not use up all their allowances in a given tax year they can elect to irrevocably transfer them to their spouse the next.  Simple! 

I would remind you that pensions are not a benefit - people have paid for those through their NI and tax contributions in the past.

By all means, the government should give a breakdown as to how much has been paid out in the different types of benefits each year.  This should include items paid by local authorities on the Government's behalf, such as Council Tax Credit.  I shall be interested to see how the new personal maxima work in practice. However, I would not trust any Government to set up and guarantee a funded system ... it would be a bit like PFI, paying through the nose for something essential and which should have been funded directly and less expensively.  All that would happen is the finance houses would cream off their percentages to fund bonuses, dividends, etc. 

I am sure we could sort out a much better system than we have at present, but I get the feeling that many fellow accountants do not want a simple tax and benefits system as it pays them for us to stay with the existing mess - discuss!

 

Thanks (0)
Replying to Kaylee100:
By cfield
29th Sep 2014 16:29

Pensions and benefits

dmmarler wrote:

I would remind you that pensions are not a benefit - people have paid for those through their NI and tax contributions in the past.

Yes, exactly, so let's not be having a system that makes them pay all over again. Age allowances aren't the answer. That would reduce their overall tax bill, not just the bit in lieu of NI, so then they'd be paying too little. Anyway, age allowances are anachronistic now. Pensioners should pay their fair share of tax. Most of them don't even need as much income as the rest of us, having paid off their mortgages and brought up their kids.

To be precise, people paid NI to afford pensions for current pensioners, not for their own, but I take your point. They paid into the system, and not just for pensions but for sickness and unemployment benefits too, something that is no longer necessary under the current welfare state. Even if your NI contributions are too low, too old or too patchy to qualify for contributions-based benefits, you can still qualify for income-based benefits. The ones that qualify for CB benefits but not for IB benefits get zilch compared to how much they've contributed. It's all wrong.

Thanks (0)
Replying to Kaylee100:
By cfield
29th Sep 2014 16:33

Simplification? No thanks!

dmmarler wrote:

I am sure we could sort out a much better system than we have at present, but I get the feeling that many fellow accountants do not want a simple tax and benefits system as it pays them for us to stay with the existing mess - discuss!

And what's wrong with that? After all, we pay huge sums to lawyers to navigate us through the minefield that masquerades as our legal system.

Also, simplification = higher tax. It's just a buzz word for politicians to disguise their true motives.

Thanks (0)
Replying to Red Leader:
RLI
By lionofludesch
30th Sep 2014 13:30

Not so simple

dmmarler wrote:

Why don't we do things simply - combine the employee NI contribution into tax?  NI is dreadful for the low paid who don't pay tax but do pay NI.  We can get rid of the directors' NI system as well (another complex area to explain to clients).  There are umpteen scenarios where the whole system is completely unreasonable, besides the different rules and rates which change every year and which even HMRC systems fail to grasp.

There's going to be a lot of trouble if I don't get to stop paying  NI when I get to 65 and 8 months.  :-((

Merge the two to save dmmarler a bit of inconvenience ?  No thanks.

Why is it dreadful for folk who don't pay tax but do pay NI ?  Our Lass is very happy that she's getting a cheap pension.

 

Thanks (0)
Replying to SXGuy:
avatar
By dmmarler
30th Sep 2014 15:41

No inconvenience with computerised systems


Merging NI with tax is nothing to do with convenience (it is not as if we had to do things manually these days ... ) it is about simplification and transparency.  It will be one less fig leaf for the politicians to hide behind, and a lot less cost for UK plc overall.   We can start concentrating on making profits rather than tax schemes. 

I suspect someone is trying to keep things complicated to charge more fees. 

Thanks (0)
Replying to SteveHa:
RLI
By lionofludesch
01st Oct 2014 17:40

Missing the point

dmmarler wrote:


Merging NI with tax is nothing to do with convenience (it is not as if we had to do things manually these days ... ) it is about simplification and transparency.  It will be one less fig leaf for the politicians to hide behind, and a lot less cost for UK plc overall.   We can start concentrating on making profits rather than tax schemes. 

I suspect someone is trying to keep things complicated to charge more fees. 

Let's see if you feel the same as you come up to retirement age. Personally, I don't see why I should fund my own state pension after funding other peoples for over 40 years.

Thanks (0)
avatar
By Wiganer Elaine
02nd Oct 2014 11:56

Merge tax and NIc

Merge the two and make the State Pension exempt from tax!

Thanks (0)
Replying to Accountant A:
RLI
By lionofludesch
02nd Oct 2014 12:21

A start, I suppose

Wiganer Elaine wrote:

Merge the two and make the State Pension exempt from tax!

Well, that's an improvement, obviously.

So - what about my other pensions?  To which I contributed with no NI relief (by and large) ?  Or bank interest ?   And dividends ?  Or any other investment income for that matter ?

What about employer's NI ?  Are they still going to chip in or is the employee's rate going up to 40% basic ?  How will that work with bank interest ?

How is benefit entitlement worked out ?  Will folk have to earn more before they qualify ?  How does that help the low-paid ?  Are we saying that poor people are best placed to fund these changes ?

Suddenly the whole thing becomes more complex than what we have now .....................

Thanks (0)
Replying to Tax Dragon:
avatar
By Wiganer Elaine
02nd Oct 2014 12:46

Not necessarily

lionofludesch wrote:

Suddenly the whole thing becomes more complex than what we have now .....................

[/quote]

You can make it as complex or as simple as you choose.

eg:

Merge tax and Ees Nic, abolish Ers NIC and raise the minimum wage, exempt state pensions from tax, set the personal allowance (or introduce a "family" allowance) at the deemed welfare benefits maximum and set a flat rate tax on all other income!

Unfortunately you can't please all of the people all of the time!

 

Thanks (0)
RLI
By lionofludesch
02nd Oct 2014 13:47

Simple ?

My experience is that "simple" and "fair" are seldom the same thing.

The Community Charge was simple.  It lasted two years of being roundly panned before being dropped.

Thanks (0)
avatar
By Wiganer Elaine
02nd Oct 2014 14:12

"Fair"

I suppose, that before you can try and determine how to engineer a "simple" system, you must first determine your definition of "fair".

"Fair" seems to be the latest buzz word used by all politicians to show the "common people" that they are on their side!

What exactly is "fair"?

I'm sure that everyone has their own opinion on this and I'm also sure that there will be many version of "what's fair". Most people will skew their version according to their political ideology rather than actually trying to actually come to some agreement and agree a set of principles!

Thanks (0)
avatar
By pauljohnston
02nd Oct 2014 15:01

isn't fair

treating everyone the same?

Politicians definition is nearer Elaine's comment!"

Thanks (0)
Replying to SXGuy:
RLI
By lionofludesch
02nd Oct 2014 17:26

Government for the Rich ?

pauljohnston wrote:

treating everyone the same?

Politicians definition is nearer Elaine's comment!"

So it's another poll tax then.

Thanks (0)
avatar
By Wiganer Elaine
03rd Oct 2014 11:25

As I said

Everyone will have their own opinion of what's fair.

Lionofludesch obviously does not think "fair" means "to treat everyone the same". 

Thanks (0)
Replying to Jdopus:
RLI
By lionofludesch
03rd Oct 2014 11:29

Of course

Wiganer Elaine wrote:

Everyone will have their own opinion of what's fair.

Lionofludesch obviously does not think "fair" means "to treat everyone the same". 

As long as everyone is prepared to share their income equally, they should share the tax burden equally.

I have no problem with that.

That's fair.

Thanks (0)
Replying to Wilson Philips:
avatar
By Wiganer Elaine
03rd Oct 2014 12:53

Please explain

lionofludesch wrote:

As long as everyone is prepared to share their income equally, they should share the tax burden equally.

I have no problem with that.

That's fair.

what you mean by "everyone sharing their income equally"

Do you mean everyone who receives investment income, everyone who works for a living or who receives pensionable income after having worked all their lives should share their income equally with those who have never worked for a living?  Is that your version of "fair"?

If all income was taxed at a flat rate everybody would pay the same rate of tax - they would share the tax burden equally; however, those who earn more would by definition pay more tax - so the person who earns £30000 (after personal allowances)would pay tax, at say 30%, of £9,000; the person who earns £100,000 would pay tax of £30,000 and the person with an income of £1million would pay tax of £300,000. Now that's "fair"!

Thanks (0)
RLI
By lionofludesch
03rd Oct 2014 13:46

Depends on your viewpoint.

So the person earning £1000 should pay £300 tax ?

As if he hasn't got enough financial problems .......

Thanks (0)
avatar
By Wiganer Elaine
03rd Oct 2014 14:17

After the Personal Allowance

That's right, after the personal allowance, anyone earning £1000 will pay £300.

 

Thanks (0)
Replying to pauljohnston:
By cfield
03rd Oct 2014 15:27

Tax for low earners

Wiganer Elaine wrote:

That's right, after the personal allowance, anyone earning £1000 will pay £300.

And quite right too! To me it would be a retrograde step to take vast sections of the population out of tax altogether. It's gone too far already in my view.

Everyone should pay at least some tax, even if it's just £100, so they understand the link between tax revenue and state spending. We're in danger of that link disappearing from some peoples minds, leading to a "money grows on trees" attitude. They will adopt the mindset "Let's spend money like water and raise as much tax as possible - I'm alright Jack as I don't have to pay any".

If millions of people start thinking that, we'll have ultra-Left wing governments for ever more until one day the money runs out, the markets won't lend us any more, inflation will be rampant as they'll have to print vast sums of money to pay the debts and all the investors, entrepreneurs and ordinary people who want to get on and make something of their lives will have thought "sod this for a game of soldiers" and given up - or fled the country.

Low earners will still have Tax Credits to tide them over, but they should not exceed the tax they actually pay. Let's turn them into real Tax Credits, not just pretend ones. If people still don't have enough to live on, then by all means give them state benefits to bridge the gap, preferably in voucher form as IDS proposes so they don't blow them on "non-essentials".

And while we're at it, let's do away with that stupid definition of poverty, which quite frankly is an insult to our grandparents and great-grandparents, many of whom really did live in poverty, and a joke to immigrants who come from Third World countries and know what poverty really is. If you've got a roof over your head, are warm and dry, have enough food in your belly and a doctor to see when you are ill, you are not living in poverty. You might be poor compared to your fellow citizens, but that's not the same thing.

Agree with you about flat rate tax - but it will never happen.

Finally, let's not merge tax and NI. Keep NI separate and restore the link between contributions and benefits, so we get what we pay for.

Thanks (0)
RLI
By lionofludesch
03rd Oct 2014 14:45

A fair day's wage

Ah - you've got me there, Elaine.

You Lancastrians are too naive for me.  ;-)

Tell me about this bloke with £1m income.  How does he earn that ?   Does he just work hard or does he overcharge his customers and underpay his employees ?  What sort of hourly rate is £1m a year ?   What trade is he in ?  Is he a banker or something ?

Is his income "fair" ?

Thanks (0)
avatar
By Wiganer Elaine
03rd Oct 2014 15:24

"Fair"

Now we appear to have come full circle! Is it actually possible for anyone to come up with a definitive version of what is "fair" ?

Let's say this person worked damned hard, had spent a few years living near the breadline whilst working 70 hours + every week to establish their business making "new widgets".

Finally, it takes off and in say the fifth year of trade, this person earns a taxable income of £1Million (after personal allowances)!

Are you saying it is "fair" to penalise this person by forcing them to pay a much higher rate of tax than "Joe Bloggs" across town who has been more than happy working his 9-5 37.5 hr week for the last few years and earning an average wage somewhere between £24 - £30k per year?

I think "envy" is the enemy of "fair"!

 

Thanks (0)
Replying to Technica:
RLI
By lionofludesch
03rd Oct 2014 15:48

Rate of Pay

Wiganer Elaine wrote:

Now we appear to have come full circle! Is it actually possible for anyone to come up with a definitive version of what is "fair" ?

Let's say this person worked damned hard, had spent a few years living near the breadline whilst working 70 hours + every week to establish their business making "new widgets".

Finally, it takes off and in say the fifth year of trade, this person earns a taxable income of £1Million (after personal allowances)!

Are you saying it is "fair" to penalise this person by forcing them to pay a much higher rate of tax than "Joe Bloggs" across town who has been more than happy working his 9-5 37.5 hr week for the last few years and earning an average wage somewhere between £24 - £30k per year?

I think "envy" is the enemy of "fair"!

Hmmm - so he works "damned hard", putting in twice as many hours as Joe Bloggs and earns 30+ times more than him.

Well, it's not my definition of "fair" but each to his own.

Thanks (0)
Replying to whatdoyoumeanwashe:
By cfield
03rd Oct 2014 16:17

Joe Bloggs

[quote=lionofludesch]

Hmmm - so he works "damned hard", putting in twice as many hours as Joe Bloggs and earns 30+ times more than him.

/quote]

The difference is that Joe Bloggs does not risk the shirt off his back or the roof over his head borrowing money to build up the business in the first place.

Nor does he risk working for nothing to keep the business going, give up holidays, sacrifice some of his family/social life or invest all his money in the business.

And he doesn't have the wherewithal and/or the balls to set up a business anyway. That's why he works for someone else.

He's happy for other people to create a job for him, keep that job going and pay him regular wages, but he gets all jealous when the business booms and they finally start to reap some reward.

If Joe Bloggs would like to help pay off the creditors if the business goes belly-up and put his house on the line as security for its loans, then fair enough, he should get some reward too when the business booms.

Until then, he should be happy to take the going rate for his work and be thankful someone has created a job for him.

Thanks (0)
avatar
By Wiganer Elaine
03rd Oct 2014 16:29

Rate of Pay

"Fairness" in the amount of tax you pay and "fairness" in the rate of pay you earn are two separate topics (imho).

My example was in relation to tax.

However I do think that there could be agreed "fair rates of pay" for certain jobs/occupations, and especially if they are paid out of the public purse.

For example, I don't understand how some people at the BBC/managers in the NHS/council leaders etc can be considered to have a more demanding, difficult job and be paid significantly more than the Prime Minister of the country! I know this is debatable, but surely the PM, as the highest ranking public servant, should be on the highest rate of pay?

The main problem with this idea I think is how do you encourage those at the lower end of the pay scale to do a good job if you get paid a set rate for a particular job irrespective of how well you perform in that job?

In public owned companies, I do think there is a huge discrepancy in the salaries of the highest paid (bankers for example) compared to those of the lowest. I would consider having some sort of set salary differential whereby the highest paid person cannot be paid more than say 25 times the lowest paid person in the organisation. (The multiplier is not cast in iron!!).

There is a lot more to think about when trying to determine what is a "fair rate of pay"

Thanks (0)
Replying to SouthCoastAcc:
By cfield
03rd Oct 2014 17:33

Fair wages

Wiganer Elaine wrote:

However I do think that there could be agreed "fair rates of pay" for certain jobs/occupations, and especially if they are paid out of the public purse.

What would be a fair rate for driving a tube train? Do you think we'd get it past the ASLEF and RMT unions?

At the end of the day, you have to go by supply and demand, as labour is the same as any other commodity. That works very well in show-business or football where the workers are paid what they are worth in commercial terms. We may not agree, but until we stop going to the cinema, paying high subscriptions for TV packages or buying club merchandise, we cannot complain. The solution is in our own hands. Stop taking an interest, or at least keep your cash in your pocket.

The trouble with supply and demand is that people rig the market. The boards of public companies and institutions like the BBC have always had a sort of back-scratching culture that bypasses the ultimate stakeholders (us) who can do little to influence their pay. There has to be some way of bringing that influence to bear. Shareholder directors are not enough. Neither are AGM votes as few people bother to cast them. It would have to be a representative body with powers to intervene where necessary. 

Same goes for the banks, whose bosses are unaccountable to their ultimate owners (us) for either their pay or the level of risk they take on in the race for ever-higher profits. Bonuses were linked to those profits but the bosses were at no real risk personally so were happy to play for high stakes. We've brought in laws to stop that happening again, but unless the FCA has the teeth to make them work, the banks will get round them somehow.

Striking tube drivers rig the market by holding the public to ransom. If we didn't have such soft labour laws, that would never have been allowed to happen. At the very least, there should have been a pool of non-unionised labour ready to drive those trains while the unions were on strike. Why not? If you don't want to do your job, let someone else do it instead. After all, it is not your job, it is your employers'.

Supply and demand can be a cruel arbiter. After all, a nurse or a cleaner probably works harder than an accountant or a lawyer, yet earns much less. But there are far more of them, so the supply side keeps their wages down. It may not be fair, but at the end of the day, the market decides, and we are the market. Fixing pay scales on some arbitrary notion of fairness is no solution whatsoever. It would never survive the next "winter of discontent".

 

Thanks (0)
RLI
By lionofludesch
04th Oct 2014 10:27

Back on topic

Anyway, merging tax and NI isn't going to happen.

Thanks (0)
Share this content