Everything you need to know about On-Demand Pay (in under 500 words)
What is On-Demand Pay?
On-Demand Pay gives employees debt-free access to a portion of their earned income before payday. This helps them meet unexpected expenses without impacting their employer’s cashflow or payroll.
How does On-Demand Pay work?
Typically, the On-Demand Pay provider funds the employee’s early access of their earned income and reclaims it from the employer on payday. This is done in two ways:
Most On-Demand Pay providers send a file detailing usage and require the payroll team to manually deduct and transfer any income taken early.
Level, Wagestream and some integrated providers automatically pay themselves back post-payroll but before the money reaches employees’ bank accounts. This splitting technology allows the employer to run payroll as normal.
Benefits of On-Demand Pay
Benefits of On-Demand Pay for Employees:
Reduce Debt Use: The flat fee charged for On-Demand Pay is usually only a couple of pounds, meaning it is 99% cheaper than the interest typically charged on short-term credit. This gives employees a debt-free alternative for dealing with unexpected expenses.
Accessible for All: Unlike most financial products, On-Demand Pay is available for all staff and everyone is charged the same fee.
More Control: Employees can choose a pay cycle that works for them. Many find it easier to budget weekly rather than monthly.
Smooth Out Income: With modern direct debts and spending spread across the month, On-Demand Pay brings income in line with outgoings to avoid peaks and troughs in people’s personal cashflow.
Benefits of On-Demand Pay for Employers:
Recruitment: Offering an innovative benefit like On-Demand Pay can help attract staff and, with tens of thousands of live roles offering it today, is increasingly expected by job seekers.
Retention: By supporting employers’ wellbeing, many studies have shown a reduction in staff turnover after On-Demand Pay has been introduced.
Shift-Filling: By rewarding overtime more instantly, shifts are much easier to fill despite the hourly rate remaining unchanged.
Absenteeism: Increasing financial health decreases stress, reducing the time employees take off sick.
What UK employers already offer On-Demand Pay?
In America, 20% of all workers have access to this employee benefit.
In the UK, it is already offered by some of the nation’s biggest employers, including Tesco, Asda, Capita, Greene King, many NHS trusts, multiple local councils, Bupa, Home Instead and Next.
On-Demand Pay providers
There are only a handful of prominent On-Demand Pay providers operating in the UK. These are:
Level: Provider to Capita, the NHS and the UK’s largest home care provider, Level is one of the founding members of the On-Demand Pay trade association. The company prides itself on being the most technologically advanced and ethical.
Wagestream: Wagestream is the choice of many big, high-street names due to its partnership with Fourth. Wagestream is the obvious choice for employers already using Fourth.
Access Group: Provides On Demand Pay to existing clients who use their workforce management and payroll software.
Ceridian: Provides On Demand Pay to existing clients who use their workforce management and payroll software.
