What is flexible pay?
Flexible pay, also known as Earned Wage Access, gives your employees the choice over how often they get paid. This replaces the extended, locked pay cycle concept, invented in the 1960s, as banking infrastructure evolved and processing fees became expensive for employers and banking providers.
The past few years of economic turbulence have put a sharp focus on employee financial wellbeing. With 1 in 3 struggling to sleep due to money stress and 1 in 4 having under £100 in savings, a growing number of organisations have introduced support to empower their staff with long-term financial health. As such, flexible pay has experienced rapid growth, with four million people now being paid flexibly in the UK alone, through major employers like Asda, Greene King, Next, Halfords and Burger King.
What does flexible pay mean for my employees?
Giving employees the ability to choose their own paycycle has a multitude of financial wellbeing benefits. In the UK’s largest study on flexible pay, with advisory input from the UK Money and Pensions Service, Nest Insight and University of California, Berkeley, 9 in 10 reported their financial situation had stabilised or improved after switching to a flexible pay cycle.
Its uses are wide-ranging, but many people use flexible pay to budget, pay for bills, emulate a weekly pay cycle and cover unexpected costs. The latter is important, as for the large proportion of workers experiencing income fluctuations and an unfixed payday, the misalignment between income and expenses can be challenging. Flexible pay enables employees to ensure their cash flow stays positive when coming up against an unexpected bill or expense.
Having the choice over when you get paid has also been proven to reduce reliance on high-cost credit, with 73% of flexible pay users reporting they are less reliant on payday loans and 72% less reliant on credit cards. Flexible pay is not a loan, has no impact on credit score, and can significantly reduce the amount of interest employees have to pay, making it an essential part of many people’s financial toolkit.
