Employment
Samantha Mann MCIPPdip MAAT
Brian Sparling ChMCIPPdip
Jaspal Randhawa- Wayte
Jill Bonehill ACIPP
Abishek Agrawal
Katie Duxbury
Jason Butler
cannot happen without payroll focused employers, supported product suites and communication messaging. Jaspal Randhawa-Wayte: Pay on demand is something we have been looking into, but I hear mixed views with some customers keen but some worrying it could be a bad idea. We don’t want our employees drawing down on their pay, to the point that when they hit payday they’ve got very little left, because then it’s always harder to catch up. So, I think the concept of using it for those sudden last-minute bills is absolutely fine. But it’s just making sure it doesn’t become a bad habit. I’m keen to draw on the experience of others. Samantha Mann: Pay on demand is a subject of huge interest to the CIPP, in ensuring payroll professionals who need to be involved are fully aware of all of the implications if an employer chooses this route. Abhishek Agrawal: One of the reccurring themes we hear from customers is the difficulty in recruiting and retaining staff in low wage sectors. Increasing pay can help but most companies cannot pay more. However, they can pay better by offering on-demand pay – this is why we created EarlyPay. The ‘working poor’ is a big issue amongst UK workers. With practically no
savings, these people are essentially one boiler breakdown away from having to visit a payday lender. I’ve seen situations where people don’t show up to work, because they can’t fill up their car. So, lack of savings and access to liquidity is a huge problem. Whilst employees are struggling between paychecks, companies over the years have moved from weekly to monthly payroll for operational efficiency. This makes things more difficult for employees. So, pay on demand is something we offer to help employees as well as employers. Using the EarlyPay app, employees can withdraw a part of their earned income whenever they wish. The money is funded by the Access Group so the service doesn’t affect companies’ cashflow. We collect the money from the employer at the end of the pay period. A small transaction fee is charged to the employee or employer depending on the contract. In some cases, the employee and employer share the fee. The service was launched in October 2019 to our customers. The demand and the feedback has been phenomenal. Employees love it, as they feel in control over their pay and have a safety net. Employers love it because they have seen people working more shifts. Getting paid early makes staff want to work more. It’s a positive outcome for both.
Usage patterns show 20 to 30% of employees using EarlyPay in a given month, typically making one or two transactions. The average withdrawal amount is around £80. More than 80% of transactions are for essentials like food or utility bills, so the service is used responsibly. Which is why more than 90% of people using EarlyPay rate it as the most important employment benefit available to them. EarlyPay is growing rapidly and we expect on-demand pay to become an industry standard within a few years. Katie Duxbury: We had a general business demand to reinstate a weekly payroll, because the monthly cycle just felt too long for people to manage their finances. What we were also finding is that, as we are in the care sector, people were taking second jobs that paid weekly whether the NHS bank or elsewhere. They were using their monthly pay to cover their monthly rent via direct debit but then using their weekly pay for food, petrol etc. So, what we wanted to do with pay on demand was to get into that ‘sweet spot’ to allow them that weekly cash flow as well as that monthly injection. Safeguarding was a massive concern for us. We had quite polarised views from the steering group and the stakeholder group we surveyed before we went live, which was helpful because it really kind of ‘held our feet to the fire’ to ensure that we know the right care is in place for people. There were concerns about giving people money quickly and therefore that they would be broke a lot quicker, and about people gambling the money away or spending it frivolously. We also kept down, quite low, the percentage that people can draw down; 45%. We estimate the money that’s available based on the lowest hourly rate the person would attract, knowing that they also do night shifts and weekend shifts, and generally are getting paid more than we’re telling the system they can draw. So,
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| Professional in Payroll, Pensions and Reward |
Issue 62 | July/August 2020
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