As work structures today gradually shift to accommodate the gig economy, pay structures also have to adapt to the changing needs of the workforce. Workers today are expecting accelerated salary payouts, thanks to the rising gig economy and flexible work arrangements. This is where flexible pay may be an efficient and effective way to address these needs.
What is flexible pay?
Traditional full-time employees typically receive their salaries on a fixed date set by the payroll team every month. Flexible pay, on the other hand, is not subjected to these conditions. It could mean paying employees their salaries daily, every alternate week or following the organisation’s standard pay cycle while staying on the organisation’s payroll. Essentially, employees are given the flexibility to decide when and how often they want to be paid.
Benefits of flexible pay to employees
Relieve employees’ financial stress
Employees typically rely on their monthly salaries for their day-to-day expenses, which may also include household expenses, taking care of kids or elderly parents, and bills. Worrying about when salaries will come in can be stressful for employees, particularly if their finances are tight to begin with. This may result in them feeling distracted at work, in turn impacting their productivity and engagement levels. Having flexible pay allows employees to manage their cash flow easily as they can have quicker access to their salaries instead of having to wait until the next pay day.
Less burden on payroll teams
Flexible pay may sound like a more time-consuming and costly option for the payroll team. On the contrary, it actually reduces the amount of work and cost investment on the payroll team and organisation! In a typical pay cycle, the payroll team has to wait until the end of a pay period to input and verify employees’ work hours, overtime, and reimbursements before processing salary payouts. This often requires a significant amount of time, particularly if there are hundreds or even thousands of employees involved. Flexible pay, on the other hand, allows employees and the payroll team to submit and approve work hours more frequently, reducing the amount of work that employees and the payroll team typically have to process at the end of each pay cycle.
Most flexible pay technology today offers automated features that allows the payroll teams to approve salary payouts to employees on the go. For small businesses, they may not even need to hire a dedicated payroll team as a flexible pay platform can easily take care of these payroll processing and approvals.
Reduces payment waiting time for new employees
When new employees join the organisation, they often join mid-way through or just past the pay cycle. There are also cases where their first paycheck is put on hold until their bank accounts and necessary paperwork have been completed and verified. This may mean waiting until the next pay cycle to get their first paycheck, which could be an entire month later.
Flexible pay can benefit new employees as they do not have to wait until the next pay cycle to receive their salaries. Additionally, most organisations and HR teams today digitise their onboarding processes, which means that most of the paperwork and bank accounts can be verified and set up before the new employee’s first day of work. This reduces the waiting time for new employees, wherein they can receive their salaries within days instead of weeks on the job.
Serves as a retention incentive
Flexible pay can inadvertently be part of an organisation’s retention strategy. As many employees today turn to a side hustle to earn extra cash flow, organisations that offer flexible pay can compete with these side hustles to offer the same kind of instant cash gratification to employees. Flexible pay can also be a key brand factor to attract and retain talents, as well as boost employees’ loyalty.
Flexible pay is a new alternative to paying full-time as well as part-time employees. When implemented effectively, organisations are able to reap the various benefits in giving employees control over their pay frequency.