To many it is perhaps reassuring that, as it has been since this research began in 2008, monthly remains the most common pay frequency with 96.5% of respondents choosing this option. However, reflecting the changing methods of payment, ‘payment on demand’ was included as an answer choice for the first time in 2019, and 0.7% of respondents indicated they used this option. Pay on demand This report has already identified the most common pay frequencies operated in UK payroll. However, pay on demand is another option for employers to consider. As the name suggests, pay on demand is a service which enables workers to ask for payment as and when they want it, rather than on their contractual pay day. Currently more prevalent in the US, it is likely that pay on demand has arisen as a result of the increase in the gig economy where workers are paid as they complete each gig, or short-term contract. There are several companies now offering this service in the UK, most describing how their services meet the growing change in approach to work amongst some workers, and their changing views on pay; these businesses also claim to offer financial education, awareness and wellbeing to employees. A true pay on demand arrangement would have a significant impact on payroll, which must meet the obligations placed upon it by legislation which requires a Full Payment Submission to HMRC on or before the date payment is made to the worker. This would render pay on demand unworkable for payroll without a legislation change. Add to that assessments for automatic enrolment and AEOs/DEOs along with NMW and salary sacrifice arrangements to name but a few, and pay on demand brings almost insurmountable challenges for payroll. But, looking at some of the services in more detail, it appears that many of the organisations are actually offering a type of loan service, either to the employee or to the employer, and then the service becomes more like a benefit in kind rather than actual genuine payment on demand. This puts a different perspective on the subject and may indeed prove to become more common in the future. But as with all loans, they must be paid back and there is always a charge for such services, with some charging the employer to give employees the benefit of being paid on demand, and others charging the employee to withdraw their money early. Change of pay frequency Because of the recent emergence of options such as pay on demand, this year the survey included a question asking respondents if they had changed pay frequency within the last two years and if so, why. 8% of respondents reported that they had changed pay frequency, with the majority switching from either weekly or fortnightly payments to monthly, with several citing automatic enrolment as the reason for the change. Respondents were then asked if any employees had requested a change of pay frequency. 7% reported that they had received such requests. The reasons given for those requests are shown in the table below. Whilst the requested pay frequencies are different, there is an underlying theme behind several of the requests which is the need to manage finances.
A further 7% of respondents stated that they had received requests from employees to be paid on demand i.e. to be paid as they do the work rather than at the end of the week or month.
CIPP POLICY AND RESEARCH TEAM PAYSLIP STATISTICS COMPARISON
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