Boris Johnson has dismissed calls to reform tax and benefit rules after claims some Greggs staff can only keep a quarter of their annual bonus.
The bakery chain has awarded 25,000 staff members a £300 bonus after a “phenomenal” year.
But Labour leader Jeremy Corbyn said some workers on universal credit will only be able to keep £75 of it.
The prime minister said Greggs was producing record figures, and only one person had complained about the bonus.
Universal Credit, which rolls six benefit payments into one, is meant to ensure no one is better off claiming benefits than working.
Benefit payments are reduced as earnings increase – but the roll-out has been beset by delays and problems, and Labour is calling for it to be scrapped.
Speaking at Prime Minister’s Questions, Mr Corbyn asked Mr Johnson if it was “just and fair” that workers earning just over £12,500 year were not allowed to keep their bonuses.
“If the prime minister can answer that question… I’ll buy him a vegan roll from Greggs myself,” he added.
Rather than making work pay, he told the PM, “it’s clear the government is punishing not supporting people”.
He said Mr Johnson had “fought with unbelievable levels of energy to protect the bankers’ bonus, why can’t he do something about the low paid?”
The PM replied: “Greggs is producing record figures – £7m extra. One person I believe has complained about the bonus system.”
He hailed “unparalleled growth in employment” under the Conservatives and said “people on low pay will be able to keep more of the money they earn” through a higher living wage and national insurance changes.
Benefits experts told The Guardian, which first reported the story, that some Greggs staff on universal credit will keep as little as £75 after tax and national insurance are paid, and bonus payments are clawed back at a rate of 63p in the pound.
Ronnie Draper, the general secretary of the Bakers, Food and Allied Workers union, which represents thousands of Greggs staff, told The Guardian it had only been contacted by one member of staff worried about losing out on the bonus.
He added that the union would discuss alternative ways the payment could be made if workers were losing out, adding that Greggs was a “decent company” that paid higher wages than most on the High Street.
It is not known how many Greggs staff members are on universal credit.
How might a Greggs worker’s bonus be cut to £75?
To work out how a Greggs £300 bonus could be cut to £75, consider somebody earning enough to pay income tax (more than £12,500 a year).
On the £300 bonus they would pay £60 income tax and £36 of national insurance, so £204 would go in their bank account.
If they were receiving universal credit, that would be reduced in line with the taper rate, which means they lose 63p in benefits for each £1 they earn. So they would lose £128.52 of their benefits.
That means that the £300 bonus would only have left them £75.48 better off.
We spoke to the Department for Work and Pensions about these figures. They told us there were Greggs employees who would be in that situation, but not all of them.
Others may already be earning enough to have stopped receiving universal credit or they may be earning little enough to have leftover work allowances (that’s the amount you’re allowed to earn before you start losing benefits).