It was a rare good news story for those of us on low incomes. Greggs, the UK-wide pasty and sandwich seller, announced in January they were giving their staff a £300 bonus.
The one-off lump sum was a share of the £7m extra profits Greggs had made in 2019, mainly down to their new vegan sausage rolls.
The story was all over the news, mainly because it’s rare to hear of a big business sharing the profits between front line staff. Greggs – who also have a charitable foundation that gives out £3 million a year to charities – were, rightly, given credit.
The Bad News
But then came the bad news. As one Greggs worker told journalist Ally Fogg: ‘Most of us are on Universal Credit. We’ll get the bonus end of Jan & it will be taken out of our UC payments in March. They’ve basically just handed £7m back to the govt.’ Greggs pay £8.21 an hour as a starting rate to sales assistants who are over 18. This is the national minimum wage for employees over 25. As many Greggs staff work part time, it means their earnings are low enough to claim Universal Credit.
For those Greggs employees on Universal Credit, when tax and NI is taken into account, they could be left with just £75.48. Meaning around £275, or over 75% of the bonus, goes back to the government. One reason for this is the way Universal Credit calculates earned income on a month by month basis. Any bonus can tip earnings over the allowed threshold. This can mean having future Universal Credit payments reduced or even having to start a new claim. It all gets very complex, but a good article on this issue can be found here.
‘Failing Working People’
Campaigners have reacted to the story by demanding changes to how Universal Credit is worked out. Frances O’Grady, general secretary of the Trades Union Council (TUC) said: “This is another example of how universal credit is failing working people. The government needs to come up with fresh plans to give low-paid workers better support, and fairer incentives and rewards.”
In March we’ll be looking at how upcoming changes to Universal Credit will affect low income workers. In the meantime, you can find loads of info on our Universal Credit pages.