Am I about to regret joining Cyclescheme?

McPhee

Hi,

I was just working out my tax for this year when I noticed that the National Minimum Wage is jumping from £5.93 to £6.08 in October. I haven't checked yet, but I seem to remember something in the Cyclescheme contract saying that if your wage drops below Nat Min after CS deduction then the scheme is terminated and you are responsible for the remaining value of the bike. My wage after deduction for Cyclescheme works out at £6.07. I'm not getting a pay rise this year. Am I about to get hit with a whopping bill for the sake of a measly penny an hour? I suspect I know the answer already

Thanks for any help/advice you can give.

Stu.

magoo289

Stu

Unfortunately under all salary sacrifice schemes your pay cannot fall below the national minimum wage after the deduction.

Your employer should have made you aware of this before proceeding with your C2W application.

Headhuunter

Am I being thick? If it's a national MINIMUM wage, how can you legally be paid less?

schweiz

He earns more than the minimum wage but his salary after C2W deduction will be less than minimum wage.

Bigcalculator

Ask for a 1 penny an hour rise. Any reasonable employer would agree. Would cost them 40p a week.

If your employer wont give you 40p a week to help out then its time for a new job!

rolf_f

Bigcalculator wrote:

If your employer wont give you 40p a week to help out then its time for a new job!

That's a slightly foolish comment. Plenty of organisations wouldn't be able to give a random pay rise and rightly so. Fine if it is a small organisation with relatively random salaries anyway but large organisations often won't have that flexibility but it doesn't mean they are a bad employer. That said though, paying that close to legal minimum isn't great!

This is a bit of a wierd one though. Obviously, the rule is a fair one. The national legal minimum wage is set as a minimum you could reasonably live on (well, in theory!), so to use C2W and end up on less than the legal minimum is clearly innappropriate. However, if you end up worse off anyway due to the extra cost of the bike, then you are also effectively dropping below the legal minimum. There is a probably a legal case not worth fighting in there!

Sirius631

Hi McPhee, and welcome.

One idea of the cycle scheme was to provide a line of credit for bike purchase that the purchaser wouldn't otherwise be able to afford. I suppose this wouldn't be an issue if you could afford the lump sum for the outstanding balance on the bike.

Do you commute regularly by bike? If you were forced to give up the bike by dropping below the minimum wage after the deduction and not being able to repay the balance, how would you get to work, and how much would that cost you? I would be surprised if the cost to you for alternative transport didn't outweigh the cost of scheme. This means that you would be even worse off out of the scheme.

Check out your figures and go have a word with your manager. They can't say yes if you don't ask.

gilesjuk

I'd be more worried about the 20% VAT that now has to be applied too.

rolf_f

gilesjuk wrote:

I'd be more worried about the 20% VAT that now has to be applied too.

He might be paying that already.