REWARD
Flexible pay: lessons learnt
Katie Duxbury MCIPPdip, head of pay and reward services, Bupa, discusses her own experiences of implementing pay on demand within the organisation, providing helpful tips for anyone considering introducing this offering themselves
A lthough opinions vary on the ethics of flexible pay, there’s no escaping the increasing number of employers biting the bullet. With over four years of pay on demand (POD) capability at Bupa, here’s what we learnt. Most people hear ‘Bupa’ and think insurance. While, yes, insurance is a massive part of our business, Bupa in the UK is a complex, multi-sector organisation, with a significant number of frontline workers. Turning the clock back five years or so, there was a consistent grumble about pay frequency, especially in our Bupa Care Services population. What made life particularly difficult for this group was the fact that pay was derived from weekly attendance rosters, so the monthly payment comprised of four weeks’ pay for two months and then five weeks’ pay to complete the quarter. Our journey Implementing a weekly payroll cycle would have been the obvious solution, but the cost of maintaining a weekly cycle would take funding away from other benefits and force colleagues who were happy with a monthly cadence on to a pay cycle they didn’t want. A new ‘one size fits all’ approach was simply not palatable. In the meantime, it was becoming more evident that our colleagues were turning down shifts in favour of another employer who was paying weekly. This dual cadence (monthly from Bupa and weekly from another employer) fitted perfectly with
the cash flow requirement of our people, but also meant that our care settings were sharing our competent and dedicated people, despite having available shifts. It was around this time that the concept of POD began to gain ground. As the name suggests, this gives an employee the opportunity to draw down on a percentage of the money they have already earned before payday. This could be to meet an unexpected bill without having to resort to expensive payday lending or falling foul of bank charges, or just perhaps to manage spending on an ‘as earned’ basis to stay within the household budget. For clarity, this is monies already earned, but tied into an inflexible pay cycle that may or may not meet the cash flow needs of the worker. The percentage available is set by the employer, and needs to be significant enough to be useful, but not so large that it creates potential liabilities when taking into consideration tax, salary sacrifice and any other deductions. In most models, the employee will pay a small fee. We met with a handful of potential
partners to understand the art of the possible and evaluate if this methodology would unlock the rigid pay as you earn cycle, by putting the employee in charge of their own pay cadence. The main challenge with getting the business case to stack up was the immaturity of data from other successful implementations, as this was such a new field. However, the business imperative was compelling, so we agreed to pair the required bravery with a risk-managed approach. We eventually partnered with Wagestream, at the time a comparatively new fintech company with an eye on the financial inequities for low-income families. Achieving the technology synchronicity between the human resource (HR) system, rostering system and payroll interface was a resource investment, but fundamentally key to limiting any additional administrative overhead in the payroll office. With the correct interfaces in place, the process is ‘hands off’, with no changes to the payroll process required. This also means we have no employee transaction footprint, preserving the user’s dignity, and a far cry
“We met with a handful of potential partners to understand the art of the possible and evaluate if this methodology would unlock the rigid pay as you earn cycle, by putting the employee in charge of their own pay cadence”
| Professional in Payroll, Pensions and Reward | April 2024 | Issue 99 30
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