In the light of the pandemic many are experiencing financial difficulties and are feeling the pressure of waiting for payday. Research carried out by Money Advice Service has previously discovered in the UK there 8.3 million adults who have found meeting monthly bills a “heavy burden” and have missed more than two bill payments in a six-month period. With the current economic climate and new research performed by EY, the weight of financial commitments is now at the forefront of people’s minds, as a result employers are exploring ways to alleviate the financial pressures currently felt by many.
What is flexible pay?
Flexible pay is a new concept whereby employees are paid with an on-demand option. This means if the employee requires their pay early, they can call their earnings to date to fulfil their financial needs removing pressures.
Flexible pay provides an on-demand solution to overcome financial difficulties without the need to ask for an advance from the employer which, in itself, is a daunting task. Flexible pay provides employees with on-demand access to their salary without cause to provide reasoning to why they need access to their salary early.
What employees needs it can address
In a study performed by EY, 73% of UK workers find it a challenging to meet everyday expenses or worry about not being able to meet them. In the report EY found 58% of people who have experienced financial difficulties have also reported a material deterioration in their health and wellbeing. Additional pressure stemming from financial difficult can cause mental health issues if long term strain of finances is not addressed. The stresses associated with these financial burdens can impact other aspects of people’s lives from health and mental wellbeing to work life and personal life.
Flexible pay provides employees with a solution that does not result in additional borrowing and interest associated with borrowing.
The benefits it can generate for employers
Flexible pay is a solution that benefits the employer as well as the employee in several ways.
- Cash flow neutral option for employers
Unlike other benefits often provided by employers, flexible pay is a cash flow neutral option. This means employers are not having to factor an upfront payment before the work has taken place.
- Seen more favourably by employees
As with other employee benefits, flexible pay offers the opportunity for employees to look favourably upon their employers. This is a benefit that is designed to help remove a common factor that triggers stress, where work life can also be a contributing factor, flexible pay helps remove stresses outside of the workplace.
- Attract Talent
When recruiting employee benefits can often sway talent to choose to work with a specific employer. Flexible pay demonstrates the employer is not only aware of the employee needs but also shows they are looking to support the employee with benefits designed to provide solutions to employee’s needs whether short or long term.
- Improve Productivity
With many working remotely as a result of the pandemic, mental health and wellbeing has been a focus for employees as it can often impact productivity. By alleviating financial strain that often negatively impacts the employee’s mental health and in turn, their productivity the employer helps prevent their employee’s productivity from being affected.
How to roll it out in your business
Part of the challenge when introducing new benefits to employees is how to integrate it within the business. With flexible payment it requires set-up, training and rolling out to employees.
So what are the initial requirements?
Flexible pay requires integration with the employer’s payroll system to enable a proportion of the employee’s salary to be available to call upon at the rate it is accrued.
Employees will be required to measure the time worked; this could be through some form of a timesheet to record what has been worked when. This measurement will help calculate the accrued earning.
If payroll is performed in-house, training your finance team is vital to ensure only the salary accrued is available to the employee and any changes to payroll processing processes with particular attention to your payroll software. Training will need to focus on how employee accrued salary data is collected and processed as part of your payroll solution whether outsourced or not.
Once the changes to your payroll is available to your employees it is important to educate them on what it means for them, what is changing for their payroll and, of course, how they can use flexible pay to call their salary early if need be.
IRIS FMP UK is an international payroll solutions provider that is able to offer bespoke payment solutions to businesses to reflect the employer and employee needs including flexible payment options. We are supporting thousands of international and UK based SME organisations. With over 40 years’ experience, we are committed to providing our clients with the very best service, offering transparency, reliability and honesty.