Financial worries can cause stress and – in some cases – be a direct cause of depression in employees. Unfortunately, many people in the UK are living close to the poverty line or just above it, living payday to payday with no spare cash to build up their savings.
But what happens when an unexpected bill arrives, their washing machine breaks down, their car fails its MOT, or Christmas stretches their finances just that little bit too far? For many people struggling financially, their only option is to turn to credit cards and their overdraft or – in the worst cases – a payday loan. While these methods fix the immediate problem, it causes a longer-term debt issue.
What if there was a way that employees could get the money they need in an emergency without creating a longer-term debt for themselves?
With Mitrefinch’s Flexipay payroll solution employers can now offer the ability for their employees to draw down some of their net pay that has been earned – before their payday. The draw-down isn’t funded by their employer, it’s simply repaid on the normal payday.
Rules are applied to the solution to dictate how much an employee can draw down, meaning there are safeguards in place to ensure they still have substantial earnings left on payday to meet their bills. This means employers can put in place a solution that will actively assist their employees’ financial wellbeing, removing the need to opt for a short-term fix that creates a longer-term debt problem.
Employers can choose to apply other rules to the system that only allow employees to draw down overtime pay. This could be especially beneficial for those who struggle to get volunteers to cover unsociable shifts – such as Friday nights, Saturdays and Sundays – being allowed to immediately draw overtime pay is a useful perk.
For employers struggling to fill vacancies this kind of benefit can set them apart from the competition and make them a more attractive employer to potential candidates. It can also help employers retain staff as this can be an essential benefit to helping them stay out of debt.
These draw-down payments aren’t credit, though. The pay must have been earned before it can be made available to employees.
So, how does it work?
The employer sets the draw-down rules.
The employees can then download an app from their app store. They chose if they want to sign-up to the service.
Once they’re signed up, they can then go into the app at any time to see what money is available to draw down prior to payday. When they need an advance, they can then select the amount and submit their request. The requested funds are then placed into their bank account. The employee will be charged a transaction fee of £1.75 per draw-down request.
On their actual payday, when the BACs file is sent, money owing will be deducted and paid over, while the rest of their pay goes into their bank account as normal. Easy.
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