Managing my money for young adults
Managing my money for young adults

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Managing my money for young adults

1  Earning while you’re learning

In the next video Bobby Seagull talks to personal finance expert Jonquil Lowe about the issues and rights of young adults in part-time work. Whether you’re already working or you’re planning to work, this conversation is aimed at you.

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Many young people start in part-time employment while still studying full-time at school or college, but what are your employment rights if you're not a permanent, full-time employee, and what can you expect from your employer?
Jonquil Lowe is a personal finance expert based here at The Open University. So Jonquil, what rights do young people have when starting part-time employment?
Well, the first thing to be clear about is whether they're an employee or self-employed. Young people are much more likely than other workers to work in the gig economy, so that's where an online app brings together workers and customers.
Now, at present, workers in the gig economy are usually classified as self-employed, though that is being challenged. If you're an employee, then you have lots of rights that self-employed people don't have, so from age 18, employees have the same rights, whatever their age, and that includes, for example, the right to sick pay, holiday pay, national minimum wage.
There are extra protections for younger workers, particularly when they're at school, and so for example, the youngest age at which you can legally work part-time is normally age 13. There are various places you can't work, such as factories or pubs, and restrictions on the hours that you can work.
So do they get a contract of employment from the employers?
Well, a contract exists whether it's written down or not, so the arrangement that you have with the employer is the contract, so that exists, regardless.
What people often mean is a written contract. You don't have the right to a written contract as such, but you do have the right, as an employee, to a written statement of the main terms and conditions of your employment, and your employer should, by law, give that to you within two months of starting work. That said, not all employers comply with the law.
What about the pay? Is it the case that some youngsters get exploited in their first employment?
Well, from age 16, there's a national minimum wage, so that puts a floor on the amount that young people can be paid, but earlier than that, then, yes, certainly, there is some scope for youngsters to be offered really very low amounts of pay for the work that they're doing. Having said that, there are restrictions on the number of hours they can work, so in the UK, it wouldn't be possible to have the kind of sweatshops that the developing world has.
So who has responsibility for sorting out the tax codes?
OK, so employees normally receive their pay after the deduction of two taxes, so that's income tax and National Insurance. Now, it's the employer's responsibility for collecting that tax and National Insurance. However, it's the individual worker's responsibility to check that they are paying the right amount of tax.
Now, the system that employers use, it's called PAYE, Pay As You Earn, and it works really well if you have just one job and you're doing the same number of hours every week or every month throughout the year, the same level of pay. It works fine, and you are quite likely in that situation to be paying the right amount of tax.
But if you're working in, say, more than one job or you're doing a lot of work during your holidays and then no work or less work during term time, so the kinds of situations that young people often find themselves in, then it's a lot more complicated, and so you'll be taxed in different ways for different jobs, and it's quite likely that you might not be paying the right amount of tax. So it's definitely worth, then, checking.
Obviously, you want to claim back tax if you've overpaid, and you've got four years to do that, but even if you've underpaid, you really want to get that cleared because there are penalties if you don't pay the right amount of tax.
And what about holiday entitlement?
So this is actually under European legislation. Everyone is entitled to a minimum 5.6 weeks of paid holiday a year, so that's if you're an employee.
If you're working full-time, that works out as 28 days holiday. If you're part-time, then it's pro rata, so if, for example, you worked one day a week, then it would be 5.6 days that you would get.
And what if you have a complaint about the way your employer is treating you? What can you do?
That's quite tricky, now, in an ideal world, you'd be able to take your complaint to your employer, so that might be your boss or your HR department, but of course, sometimes it doesn't work out that way.
There are some very specific areas, like sick pay and national minimum wage, that HM Revenue and Customs- so that's the same body that looks after income tax- they also look after those areas, so you could make a complaint there if you weren't getting, say, the national minimum wage, but in general, life is not quite so easy.
So in most areas, legally, you have resort to employment tribunals, but those are expensive, and before going there, you have a requirement to get in touch with the Advisory Conciliatory and Arbitration Service, so Acas, who can offer you and your employer a free conciliation service. But neither of you has to take up that offer, so you might end up in a tribunal.
But having said all that, Acas run an advice service, and so that would always be a good place to take any dispute that you've got as a first step, just to get a bit of advice about, what are my rights? What can I do? So you can find Acas by googling online.
Jonquil, thank you very much.
Thank you.
End transcript
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Limits on working hours

  • Under 13. You’re allowed to work if your job is in television, theatre or modelling. You need to get a child performance licence from your local council.
  • Under 16. You can work a maximum of 12 hours a week during school term time, although this includes a limit of 2 hours on individual school days and Sundays. During school holidays the weekly maximum is 25 hours for 13- and 14-year-olds and 35 hours for 15- and 16-year olds.
  • Between 16 and 18. You may work up to 40 hours a week, but clearly you cannot work during school or college time.

Children are also not allowed to be employed in any work deemed harmful to their health, wellbeing or education. Local bylaws list the jobs children cannot do.

Wage entitlements

National Minimum Wage entitlement starts at school leaving age, at the end of June in the school year you become 16.

National Living Wage entitlement starts at age 25 and replaces the National Minimum Wage.

In 2020/21 the rates per hour for the minimum and living wage were:

under-18 years£4.55National Minimum Wage
18–20£6.45National Minimum Wage
21–24£8.20National Minimum Wage
from 25£8.72National Living Wage

If you’re in an approved apprenticeship a separate minimum wage applies. In 2020/21 the rate per hour was £4.15 for those aged under 19 or aged 19 and over and in the first year of their apprenticeship. From the age of 19 those who have completed the first year of their apprenticeship are entitled to the National Minimum Wage for their age.

From the age of 18 you’re entitled to full adult employment rights, including the right to a contract of employment from your employer.

The key thing is that your studies should come first. Why? Because they’re designed to skill you up, to get you to an entry point that gives you more options than you have at present. They equip you with what you need for a great future career. At the very least, a careful balance needs to be maintained.

Activity 1  Minimum wage check

Timing: Allow about 5 minutes

What’s the minimum wage for your age?

If you’re working part-time look at your most recent pay slip. Are you getting paid at least the minimum wage rate that applies to your age?

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Hopefully your employer is complying with minimum wage regulations. If they’re not, you need to bring this to the attention of your parents and then take it up with your employer.


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