The salary advance is a vague matter when questioned under the CLT law. Since there are no specific rules on this subject and on how to provide the salary advance.
The theme is mentioned only in the article 462 of the CLT which provides for the possibility of discounts on wages in the event of any type of advance payment, whether spontaneous or requested.
As a result, several questions arise for employers about how to provide the salary advance correctly. Since there are currently several models such as the so-called “valleys” and the on-demand salary, for example.
If there is no specific law on how to provide the salary advancel, how should companies proceed? In this article we will provide answers to the main doubts on the subject. Good reading!
What is a salary advance
The salary advance is a benefit offered by companies, with the objective of supporting employees who need the money before the payment date. It is not a mandatory concession, but it serves as a strategy for retaining talent.
As there is no obligation on how to provide the salary advance, it is common for agreements to be made through collective agreements and unions.
Check the mention of the salary advance made in the article 462 of the CLT:
“The employer is prohibited from making any discount on the employee's wages, except when the latter results from advances, legal provisions or collective agreements.”
Understand how the salary advance works
Thinking about the doubts that may arise, we separated some regresses of the salary advance. Check it out below:
Who is entitled to use the wage advance?
If the salary advance is provided for in company policy, this benefit must be offered to all employees, without restriction by position or sector.
Is there a maximum amount in the salary advance?
Normally, the amount of the salary advance cannot exceed 40% of the employee's remuneration. Assuming that a worker has a remuneration of £ 1000 and worked 30 days in the month, his advance will be equivalent to £ 400.
How to calculate the salary advance?
The basis for calculating the wage advance is based on the following information:
- Percentage, which can reach 40%;
- Worked days;
- Number of days in the month.
The calculation must be carried out as in the following model:
Salary multiplied by the maximum percentage of advance, divided by the days of the month and multiplied by the number of days worked. The result obtained will refer to the amount of the advance.
We will consider the same worker mentioned in the previous topic, with the same salary and the same period worked. Then:
$ 1000 x 40% / 30 x 30 = $ 400
If the employee does not work the full month, either in case of admission or return from vacation, just use the same formula, replacing the number of days worked in the month
How should the salary advance be paid?
As there is no requirement from CLT, companies can choose the day to pay the employee's salary advance. However, most of the time, this type of payment is made in the last half of the month.
How many days are needed to receive the salary advance?
Yes and no. In fact, he must have worked ⅓ of the month. Following the logic of the previous answer, we will assume that the employee has worked the equivalent of 10 days of a month that has 30. For this reason, he is entitled to receive up to one third (33%) of his monthly salary in advance.
Heads up: once made, the payment of the amount must be itemized on the payroll. That is, the salary advance must be included in the pay stub.
Salary advance models
For your company to know how to provide the salary advance, we have separated four of the most used in the current market. Check out what they are and find out how they work.
51% of UK citizens opt for some type of loan to be able to settle credit card bills, car installments, home and taxes in general, according to the Google Survey.
In view of this, many companies, thinking about reducing the financial stress of its employees, started to offer an innovative proposal for salary advances.
The so-called salary on demand gives employees the autonomy to withdraw part of their payment at any time of the month. This means that the employee receives a part of the amount, according to the days worked.
In this way, the feeling that the month never ends never diminishes, since the professional will have money to pay his bills. This action even increases the employee's motivation and gratitude towards the company.
HR Consultants UKy: the best option of salary on demand
HR Consultant UK offers management software, the HR Consultants UKy, which allows you to manage the on-demand wage model quickly and effectively. Through this innovative tool, the employee requests the salary advance through an application and, within an hour, the money is available in the registered account.
With the benefit of salary on demand, via HR Consultants UKy, in a proven way, there is an increase of:
- 10% in talent retention;
- 20% in employee productivity;
- 100% in attracting new professionals in the market.
The voucher is one of the models of how to provide the most common wage advance in the market. Through it, the company makes part of the salary available to employees who opt for this benefit, on a predefined date.
The amount of the advance, which is usually up to 40%, is paid in cash or via deposit normally between the 15th and 20th of each month.
Companies that use vouchers as a wage advance necessarily need a lot of organization and planning. This is because it will be necessary to make complex accounts involving values and percentages on a monthly basis.
Less than 40% vouchers
In addition to the vouchers that make up 40% of the employee's salary, there are some with lower values than these.
As we have already said, there is no specific law that limits the percentage of the advance. Therefore, if there is an agreement between the employee, employer and the class union, that percentage can be reduced.
It is clear that decisions like this should be part of the organization's salary advance policy, so that there are no doubts or labor problems future. It is the company's obligation to be transparent about the operation of this benefit.
Another viable model on how to provide the salary advance comes through the multi-benefits card.
Also called an agreement tool, it is a card where the company deposits a certain amount in which the employee can use in medical and domestic expenses.
The idea in this case is to contribute so that the employee can better control his money for things that are really necessary, functioning almost like a financial educator.
In fact, one of the characteristics of employees who adhere to the multi-benefits card is to have greater control over their finances, avoiding superfluous expenses.
Meet the HR Consultants UK
The role of HR Consultants UK in the labor market it is to reduce the bureaucracy between the employee and the employer in a modern and effective way. That's why HR Consultant UK offers people management software that can reduce HR costs by up to 30%.
Solutions like HR Consultants UKy, focused on salary on demand, reduces the bureaucracy of processes, in addition to allowing HR more time to dedicate to strategic actions in people management.
Do you want to leverage your results? Count on a team of specialists to meet your company's needs.
Use the wage advance and stay ahead of competitors
Knowing the guidelines on how to provide the salary advance can be a great market differentiator. Given that this benefit can create a relationship of trust and gratitude between the company and the employee.
In addition, the salary advance can also be a way of making the bureaucracy in the relationship between the company and the employee more flexible and less bureaucratic.
Especially if the organization is betting on management software, such as HR Consultants UKy, which are able to increase employee productivity, reduce financial stress and enhance engagement.
So, your company will be able to use the salary advance as a strategic tool capable of attracting and retaining new talent for the company.
Want to know the best tool to provide salary on demand? Watch the video below and learn more about the app on-demand salary.