On-demand Pay, also known as salary on-demand, is a payment method that allows employees to receive their wages as they work rather than having to wait until the end of the month. This payment system has become increasingly popular among both employers and employees due to its numerous benefits.
For employees, on-demand pay is a solution to their financial problems, particularly when faced with unexpected expenses or emergencies. Employers also find this payment method beneficial, as it enables them to attract and retain top talent.
A survey was conducted among 13 workers to gauge their opinion on the concept of on-demand pay. Of the 13 respondents, only one worker did not welcome the idea, as he claimed to have a good handle on his finances and never found himself in need of immediate funds.
However, the remaining 92.3% of workers, particularly those with families, expressed a positive attitude towards on-demand pay. They believe it could enhance the work culture within organizations and therefore urged their employers to consider implementing this payment system.
Reasons Why On-demand Pay Is Widely Accepted
Employees often face financial difficulties and search for ways to alleviate their financial burdens. Many employees resort to payday loans, which can be challenging to repay upon receiving their monthly salaries. However, on-demand pay offers a sustainable solution to employees’ financial struggles.
The appeal of on-demand pay to workers is closely linked to its numerous advantages. These advantages not only benefit employees but also employers and recruiting officers.
In today’s competitive labor market, where the hunt for top talent is a fierce battle among employers, candidates are more likely to gravitate toward employers who prioritize their financial well-being. Hence, many employers embrace the idea of on-demand pay, as they see it as a means to attract and retain top talent.
How Does On-demand Pay Contribute To Employees’ Well-being?
Millions of employees across Nigeria often resort to taking high-interest loans from predatory loan apps to address their urgent financial needs while awaiting their salary at the end of the month. Such loans can have a detrimental effect on employees’ finances.
While some employees may prefer receiving their payment at the end of each month, most would appreciate a more flexible payment method. This would allow them to withdraw a portion of the money they have earned over time from their service to their companies.
Companies that offer on-demand pay as a payment option to their employees are perceived to be invested in the well-being of their workforce. By providing a more flexible payment method, employers can demonstrate that they are attuned to the financial needs of their employees and are committed to supporting them in maintaining a healthy work-life balance.
Limitations Companies Might Face In Implementing On-demand Pay.
A 2020 survey showed that 25% of payroll professionals considered on-demand pay to be a necessary solution for enhancing the employee experience, which was a top priority at the time.
However, not all companies can easily incorporate on-demand pay into their payroll system. Implementation of this payment method could be burdensome for the accounting department of some companies, and the associated costs could be inhibitive.
In such cases, third-party services like Earnipay provide an alternative solution to enable companies to offer on-demand pay to their employees effectively as it syncs effortlessly with existing payroll systems.
Earnipay also provides an intuitive Payroll solution that takes the stress off business owners and HR teams.
Can An Employee Choose Not To Withdraw From An On-demand Pay Plan Until The End Of The Month?
This question is a popular question that some employees ask when they are introduced to on-demand pay. On-demand pay allows flexibility. That is, you can only process a withdrawal once you request it. Therefore, an employee can decide not to withdraw their salaries and wait till the end of the month to withdraw their full salary.
The on-demand pay solution helps employees attend to their unplanned expenses without having to go extreme in sourcing funds to cater to their immediate needs.
Predictions have it that by the end of 2023, many companies will have adopted the on-demand pay method, most of which will seek partnerships with fintech companies offering on-demand pay as a service. As an employer, you should look into third-party fintech companies offering reasonable service rates.
Earnipay’s on-demand pay service is one to consider when choosing a third-party service for on-demand pay. It comes at zero charge to business owners and employees are only required to pay tiny flat withdrawal fees.