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lindagray

Wages and tax

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Since 1998, the United Kingdom has fixed a national minimum wage,  but collective bargaining is the main mechanism to achieve "a fair day's wage for a fair day's work". The Truck Acts were the earliest wage regulations, requiring workmen to be paid in money, and not kind. Today, the Employment Rights Act 1996 section 13 stipulates that employers can only dock employees' wages (e.g. for destroying stock) if the employee has consented to deductions in writing. This, however, does not cover industrial action, so following 18th century common law on part performance of work, employees who refused to 3 out of 37 hours a week in minor workplace disobedience had their pay cut for the full 37. From the Trade Boards Act 1909, the UK had set minimum wages according to the specific needs of different sectors of work. This eroded from 1986, and then repealed in 1993. One wages council that survived was the Agricultural Wages Board, established under the Agricultural Wages Act 1948. It was abolished in England in October 2013, though boards still operate for Scotland, Northern Ireland, and Wales.

To bring the UK back into compliance with international law, the National Minimum Wage Act 1998 was introduced. Every worker" who personally performs work, but not for a client or customer,  However, it was held that a pupil barrister did not count as a worker.  The minimum wage rate is revised annually after guidance from the Low Pay Commission, but since 2010 has been cut for under 25 year olds and young people doing apprenticeships. The National Minimum Wage Regulations 2015 state that for people who are not paid by the hour, total pay is divided by the hours actually worked over an average "pay reference period" of one month. Workers who are "on call" have to be paid when they are on call. But if a worker is given sleeping facilities and is not awake, the minimum wage need not be paid. However, an employer may agree with a worker what the hours worked actually are, if hours are ordinarily be unmeasured. In Walton v Independent Living Organisation Ltd a worker who cared for a young epileptic lady had to be on call 24 hours a day, 3 days a week, but could do her own activities, such as going shopping, making meals and cleaning. Her company made an agreement with her that her tasks took 6 hours and 50 minutes a day, which resulted in her £31.40 allowance meeting the minimum wage. Deductions up to £6 per day can be made for accommodation the employer provides, though extra bills, such as for electricity, should not ordinarily be charged. The minimum wage can be enforced individually through an Employment Rights Act 1996 section 13 claim for a shortfall of wages in a Tribunal. A worker may not be subjected to any detriment for requesting records or complaining about it. However, because many workers will not be informed about how to do this, or have the resources, a primary enforcement mechanism is through inspections and compliance notices issued by Her Majesty's Revenue and Customs (HMRC). A remedy of up to 80 times the minimum wage is available to the worker and HMRC can enforce a penalty of twice the minimum wage per worker per day.

Unlike the rules for Value Added Tax Act 1994, where consumers must see the prices they actually pay after tax, there is currently no requirement for workers to see the final wages they will actually earn after income tax, and National Insurance contributions. Under the Income Tax Act 2007, as amended each year by the Finance Acts, in 2019 the 'personal allowance' with 0% was up to £12,500 in income, a 'basic rate' of 20% tax was paid on £12,500 to £50,000, a higher rate was 40% on income over £50,000, and a top rate of 45% over £150,000. The top rate of income tax has been dramatically cut since 1979, while taxation for the richest people, who receive most money through capital gains, dividends, or corporate profits has been cut even further. People will be classified as liable to pay income tax whether or not they work through a company. From 2015 to 2019, the "personal allowance" was linked to the minimum wage, but only up to 30 hours a week of pay (as if people usually had a three-day weekend). This link was cut, and there is no personal allowance for National Insurance contributions, which fund the state pension, unemployment insurance (now partly the universal credit), and the insolvency fund. While self-employed people generally pay the same income tax (albeit with more exemptions and deductions) they pay 9% in National Insurance contributions, while an employee pays 12%. In addition, the employee's employer makes a standard 13.8% contribution, while the "self-employed" person has no employer to make such a contribution. These disparities give a large incentive for employers to misrepresent true employment status with "sham self-employment".

wikipedia.org

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