Have you ever heard of advance payment? Probably yes, but you know how the wage advance works?
The wage advance is nothing more than an early release, which the company makes of part of the employee's salary.
The main function of what is a salary advance is to help in the biggest financial problems of its employees and positively impact on the quality of life of employees.
This solution reduces the stress of employees in relation to the lack of money throughout the month and consequently influencing their well-being and productivity.
But how does wage advancement work in practice? That is what we are going to talk about in today's article. Good reading!
How does the salary advance work?
The salary advance is a non-mandatory corporate benefit under the law, strategically granted by certain companies.
It's the advance payment a portion of the employees' wages before the usual date.
There are no laws that lay down rules on how the wage advance should work.
Even so, the topic is a matter of doubt within many organizations that don't know how to proceed on the subject.
For this reason, the wage advance respects trade union conventions and class agreements.
Who is entitled to a salary advance?
Since we know how wage advances work, a recurring question is about who is entitled to it.
In fact, there are no legal rules for this type of concession, it is recommended that the company create an internal benefits policy related to it.
However, it is not correct to make it available only to a small number of people. All employees have the right to receive it, except for any restrictions made in negotiations with the union.
Therefore, it is important to define rules to be followed and that have validity for teams in general, regardless of the positions and functions.
How are wage advance discounts made?
It is common for the wage advance to vary from 20 to 40% of the employee's salary and is made between the 15th and 20th of each month.
This variation exists because, as we said earlier, there is no specific law on how the wage advance works.
Therefore, flexibility at work must involve negotiations on the percentage, which must be defined by common agreement between employee, employer and union.
We emphasize that the employee has the right to suspend the advance, if you prefer to receive the full salary at the end of the month.
The different ways to carry out the wage advance
Now that you know what is wage advance and how it works, it is common for questions to arise about how it can be made available.
Therefore, we have prepared a list of the different ways to offer the salary advance. Check out!
Undoubtedly, the so-called “voucher” is one of the most used methods in relation to salary advances.
Through it, the company sets a specific date in the month and makes payment via deposit or in kind, according to the organization's payment policy.
The percentage of this salary advance is previously defined and this voucher is deposited only to employees who choose it.
These advances, in the so-called vouchers, not only require the responsible sector to know how the wage advance works, but also a thorough control of all payments.
This is because different financial management of variations in wages and percentages will be necessary.
This work, especially if done manually, can be doomed to payment errors and future labor lawsuits.
The ideal in this case is automate processes through payment management software.
2. Multi-benefit card
Many companies choose not to make the advance in cash and choose to provide the salary advance, through the so-called agreement tool, which is nothing more than a multi-benefit card.
The amount deposited on the card can be used for household expenses and the purchase of medicines.
According to data from a survey by Alelo, in relation to domestic expenses, about 40 to 50% of spending, come from pharmacy, food and culture.
Much is said that the multi-benefit card it can also be a support for those who want to have greater financial control and need to spend their wages with greater responsibility.
Therefore, in addition to having the exact knowledge of how the salary advance works, the company in this case is helping the employee to maintain well-being at work on time.
Helping you even to have a certain financial education in the use of your salary.
3. Salary on demand
Who never ended the month without money?
Or even had to resort to loans or savings to pay any unexpected debt?
Thinking about this financial stress that many employees go through, a type of salary advance gains strength in the market, the so-called salary on demand.
With it, the company offers autonomy and flexibility so that the employee has access to part of his payment at any time.
This means that the employee can request, at any time he wants and needs, the value of days worked. This feature can:
- attract and retain talent in the organization;
- generates financial well-being;
- increases productivity;
- decreases financial stress and so on.
O HR Consultant UKy is the new product from HR Consultant UK that manages thes on demand wages in a simple and effective way.
How to create a salary advance policy
Even though it is not part of specific legislation, it is essential that the company not only knows how the salary advance works, but also creates an internal policy in relation to this benefit.
In this sense, the assignment of the salary advance becomes more transparent and organized, avoiding possible doubts about:
- the date of payment;
- adopted model.
In addition, it is important that the company is clear and objective with employees in relation to the policy of payments and advances, since they started at the company.
Salary advances and their competitive advantage
In a market where companies need to find alternatives to reduce turnover and retain talent, knowing how salary advances work can help.
This is because investing in this strategy can be a great competitive differential.
In addition to increasing the flexibility and participation of employees in the managing your own money, the wage advance can improve and strengthen the bonds between employer and employee.
When there is no financial pressure, due to lack of money, the employee tends to worry less about personal things and his productivity increases.
And this is exactly the role of the salary advance, providing a greater financial balance to employees.
Do you want to know more about the salary advance facilities? Read the article “What is HR Consultant UKy: find out how the on-demand payment app works”, gives HR Consultant UK on HR Consultant UKy – innovative management software that facilitates payment on demand.
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Talk to one of our experts and learn more details about the service.
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