Pay on demand, giving employees early access to their earned wages, does not necessarily address the issue of transparency, but it is a model that can reap significant benefits for the business. In sectors such as retail and hospitality, pay on demand can help to manage staffing challenges, but it also has a role to play in recruiting and retaining talent, and supporting financial wellbeing in the workplace.
Natural health and beauty brand Coolherbals introduced Balance, a financial app that helps workers track their earnings and access their accrued salary to date, for its 20 employees in January 2020.
Ravi Bhanot, director at Coolherbals, says: “Members of the team were often asking for a pay advance or telling us about financial issues they were experiencing ahead of payday. We felt that providing early access to their earned wages would support their financial and mental wellbeing, but we also saw it as a useful tool in hiring and retaining talent, as pay on demand is very attractive to people.”
The advances are paid externally by Balance, and reconciled at the end of the month, avoiding disruption to cash flow or payroll. Employees access Balance via a dedicated web portal for Coolherbals. Currently more than half of the team are utilising the service.
“Workers were coming into the office stressed, especially towards the end of the month when they may have had bills and other expenses popping up,” says Bhanot. “This scheme eases that stress and also empowers them, as it is their own finances they are accessing, rather than money borrowed from high-cost credit sources.
“It has a positive effect on their mental health by preventing spirals of debt, while that immediate access to the fruits of their labour has made people feel more motivated.”