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Payday Loans in The Workplace?

  • September 30, 2019
 

We are often asked about the Perks & Benefits provided by our clients and there are some truly innovative schemes out there including unlimited holiday, car allowances paid out as lump sums and share schemes in ambitious young firms. These types of developments are essential for both young & growing firms to help them stand out against their competitors in a homogenous marketplace.

One new perk that seems to be taking the United States by storm, utilised by the likes of Walmart and nearly 12% of companies in the US, is a perk called “accelerated pay”. The general concept is that you can access your income earlier than payday. To the untrained eye, this sounds far too close for comfort to a payday loan which is hardly a healthy financial tool and may lead an employer to question their employees private financial status.

In reality, “accelerated pay” is a sophisticated perk that turns the general idea of a weekly or monthly payroll on its head. Employees are now able to access their salary as they earn it in real-time with the only cost being a few dollars, rather than incurring both a fixed charge and an interest rate running in to triple digits.

The general thought pattern is that this perk can help employees when they have unexpected expenses which can take months to recover from. However, I’m not sure about the reality of this perk for employees. Yes, it’s good to have access to money when you have unexpected expenses and avoid more financially dangerous products, but for those in lower-income brackets, this could lead to financial setbacks further down the line. It seems to be a perk that should be used sparingly and in a controlled manner so that the employer isn’t encouraging unhealthy financial habits and avoiding giving a long-term support solution to a struggling employee.

I was surprised to hear that 12% of US companies are utilising “accelerated pay” as it feels like a very niche perk. Do I think this will catch on in the Legal sector? I think it could work in the UK, but not in a professional Legal market as the end client (and the SRA) ultimately expect legal professionals to be financially sound in their personal lives to avoid any chances for impropriety.

What do you think about this perk and whether companies in the UK should start utilising it?

Written by Operations Manager James Anscomb