The Financial Implications of Work

List as many reasons as possible why people go to work. Now put them in order of importance. Starter Question

Why work? Opportunity to meet people / friendships To work in a team To earn money To provide for family To gain life/job satisfaction To learn new things To make a difference to the world To make other people’s lives better To give people a purpose To contribute to the national wealth of the country

Learning Objectives To identify reasons why people work To discuss the benefits and implications of different ways of working To explain the different national wage systems in the UK To discuss the impact of different ways of working on individuals and their circumstances

There are many different ways of working in the UK. All types of employment affect your income, rights at work, and long-term financial decisions in different ways. Employed Self-Employed The terms of the employment contract (wages, rights and benefits) are determined by the employer. Employer deducts Income Tax and National Insurance Contributions on behalf of the Government. Employees over 22 years old and earning more than £10,000 a year must be enrolled in a workplace pension scheme (you can then choose to opt-out). You run a business and are responsible for its success or failure. You decide how and when to do the work. You use your own money (or other borrowing) to invest in your business. Usually you get to keep the profits of the business or pay yourself a wage.

Employment contracts Full time Usually working 35 hours or more a week, full time workers are provided with a contract of employment and receive benefits such as holiday pay, sick pay and pension opportunities. Part time Working fewer hours than a full time worker but receives the same treatment and benefits (though these may be proportionate to the number of hours worked per week). Short term contract This can be on a full or part time basis but is only for a fixed (temporary) period of time. Zero hours contracts These are casual contracts which offer no guarantee of any work. They often benefit employers who require staff at short notice to meet a temporary or increased need and can benefit employees as they may allow flexible working around other commitments. People on zero hours contract are entitled to the National Minimum Wage and holiday pay, however they are not guaranteed a minimum number of hours.

Self-employment Contractor Provide skilled work to clients on either a long or short term basis, usually under the Contract for Services. Freelancer Similar to contractors but do not commit to working for the same company and often work for a number of different clients at the same time. The gig economy Workers get paid for each “gig” or one-off job they complete, for example courier services or delivering food. The organisations they work for may take a percentage of what they earn.

Activity Ways to Work – Benefits and Implications   Benefits Implications Full time contract Nancy Part time contract Johan Short term contract Kezia Zero hours contract Maya Gig contract James Freelancer Zi Activity In your opinion, which types of employment contracts provide the best protection for workers? Why?

Apprenticeships Opportunity to gain industry experience while studying towards a qualification Apprentices receive a minimum wage (the apprentice rate if under 19, or the normal minimum wage if you are 19 or over and have completed your first year of the apprenticeship). You are entitled to at least 20 days paid holiday per year, plus bank holidays.

Different ways of working National Minimum/Living Wage Minimum Wage (2018/19) Minimum Wage (2019/20) 25 and over National Living Wage £7.83 p/hr £8.21 p/hr 21 to 24 £7.38 p/hr £7.70 p/hr 18 to 20 £5.90 p/hr £6.15 p/hr Under 18 £4.20 p/hr £4.35 p/hr Apprentice (Under 19 or in the 1st year) £3.70 p/hr £3.90 p/hr

Real Living Wage Set by the Living Foundation Based on the cost of living and what workers aged over 18 realistically need to live From 2019, the real living wage is £9.00 p/hr (£10.55 for London) Employers voluntarily sign up to be living-wage accredited (unlike the National Minimum Wage or National Living Wage, which is required by law)

National Living Wage vs. Real Living Wage Summarise the key differences between these two wage systems. As an employee, which wage system is fairer? Why? Why would employers voluntarily choose to pay the Real Living Wage instead of the National Living Wage?

Cara has recently passed her advanced apprenticeship in accountancy and has been offered a full time, permanent position at the company where she works. Her salary will be £24,000. Last week, she also attended an interview with a different firm of accountants who wish to offer her a similar role but as a contractor. Plenary What financial considerations does Cara need to take into account before she accepts either of these roles? What other non-financial factors may she need to consider? In your opinion, which job should Cara accept and why?