OTE and National Minimum Wage

[ToothbrushMan]

Applied for a role recently.

Got an email today asking me to confirm that I am happy to continue with the process based on the hours and pay that was stated in their email.

The basic for the first 6 months is £18k with a car provided or £20k if you didnt want a car. After 6 months the salary drops to £10k and £12k respectively but they state OTE is up to £35k.

Based on not taking a car and a 35 hour week I make the hourly rate £6.59 at a salary of £12k and for folk over the age of 25 I believe the national minimum wage is £7.83 (or a salary of £14,250). It even appears to breach the pay rate of £7.34 for those aged 21-24 by approx. 70p an hour.

Is the employer in breach of the NMW law once the 6 month honeymoon period is over and the salary is reduced and if so how should I respond to them now?

I really dont know a company's standing when you bring OTE potential earnings with sales commission in the equation as that should be on top of your basic surely?

Edited by ToothbrushMan on Monday 17th September 18:00

[Mandat]

ToothbrushMan said:

Applied for a role recently.

Got an email today asking me to confirm that I am happy to continue with the process based on the hours and pay that was stated in their email.

The basic for the first 6 months is £18k with a car provided or £20k if you didnt want a car. After 6 months the salary drops to £10k and £12k respectively but they state OTE is up to £35k.

Based on not taking a car and a 35 hour week I make the hourly rate £6.59 at a salary of £12k and for folk over the age of 25 I believe the national minimum wage is £7.83 (or a salary of £14,250). It even appears to breach the pay rate of £7.34 for those aged 21-24 by approx. 70p an hour.

Is the employer in breach of the NMW law once the 6 month honeymoon period is over and the salary is reduced and if so how should I respond to them now?

I really dont know a company's standing when you bring OTE potential earnings with sales commission in the equation as that should be on top of your basic surely?

Is it really going to be a problem with the OTE being well above minimum wage anyway.

Presumably, even the worst performing member of the sales team would be able to muster enough sales to earn up to the NMW threshold. If they aren't even able to achieve that, I presume that they would be shown the door tout suite.

[Leicester Loyal]

Why does the wage drop by 10k after 6 months?!

I never believe OTE, I've always found them fictional. Divide the number in half and you'll be close to the actual figure of earnings.

[ToothbrushMan]

Leicester Loyal said:

Why does the wage drop by 10k after 6 months?!

I never believe OTE, I've always found them fictional. Divide the number in half and you'll be close to the actual figure of earnings.

presuming they are training for the first 6 mpnths then youre on your own to top that back up.

i'm not interested in the "what ifs". ive tried to just keep it simple with a straight question.

if anybody knows the legal position as to whether you disregards OTE when working out the hourly rate as far NMW goes..

[makaveli144]

Unless you are technically "self employed" then yes they are breaching NMW.

[Vaud]

ToothbrushMan said:

presuming they are training for the first 6 mpnths then youre on your own to top that back up.

i'm not interested in the "what ifs". ive tried to just keep it simple with a straight question.

if anybody knows the legal position as to whether you disregards OTE when working out the hourly rate as far NMW goes..

Call ACAS, they will give you free advice.

I am not a lawyer, but the fundamental is that an employer cannot pay you less than NMW, regardless of OTE, bonuses, in kind gifts, etc.

[StevieBee]

ToothbrushMan said:

Applied for a role recently.
Is the employer in breach of the NMW law once the 6 month honeymoon period is over and the salary is reduced and if so how should I respond to them now?

Edited by ToothbrushMan on Monday 17th September 18:00

This sounds very much like something we've seen some of our more unscrupulous competitors use to minimise or avoid employers NI contribution payments.

I confess I don't know the exact detail but what I understand is that the the OTE is set at a largely un achievable figure so you end up earning less than NMW. But paying less is illegal so the employer tops this up but they classify this is as something other than 'wages' that puts it outside of the requirement for them to pay the 12% or whatever it is, NI contribution payment that would otherwise apply.

Morally, it's questionable but does actually fall within the bounds of legality.

As mentioned, ACAS a good starting point but also the National Living Wage Foundation is worth a chat with too.

[4x4Tyke]

Sounds very fishy.

OTE, without knowing the target, the commission rates or sales opportunities makes it more so.

[SAS Tom]

This sounds very similar to a car sales job I went to an interview for. Not sure if it’s legal but sounds like more than one company are up to it.