Pay day covers what period?

hwalkerh

Just about to employee our first employee. Want to make sure i have thought about everything for paying them. i've worked out that if we say their pay day is the 23rd that means the money needs to go into there account that day and therefore need to take account of the 3 days it takes payment to clear and bankholidays etc.

In regards to pay what period does this standard cover? e.g 2 weeks in advance and 2 behind? or 4 weeks behind? Is there a set rule?

Thanks

Savvy_Sue

hwalkerh wrote: »

In regards to pay what period does this standard cover? e.g 2 weeks in advance and 2 behind? or 4 weeks behind? Is there a set rule?

There is no set rule: the pay period can be whatever you say it is.

We pay on 25th of each month, and as you say, you need to allow time for it to go into people's accounts. However, paying on 25th is a historical anomaly IMO. We used to make sure people had their cheques - you remember the days when we all got a cheque rather than payment to our bank accounts? - so that it could be paid in and cleared by the end of the month, allowing people to write cheques for their rent etc safely at the start of the month.

But our pay period is for the complete month, and I'd say we pay 1 month in arrears (even though we actually pay 25 days in arrears and the rest of the month in advance).

Now, if you make the date for payment too early in the month, you run the risk of people walking out just after you've paid them, leaving you potentially out of pocket. Plus, if there are any adjustments to make relating to the end of the month, you'll often end up making them the month after. The adjustments I'm thinking of are if you only pay SSP, or someone asks for unpaid leave. That's fine, as long as people are clear about such adjustments and why and when you're making them.

One suggestion: if you regularly have adjustments to make because of overtime / extra shifts etc, I'd make them the month after the month in which they are worked. We have some people who regularly work overtime, so they get their basic for August on 25th August, but any extra shifts won't be paid until 25th September. Otherwise I'd forever be making adjustments because someone hadn't worked a shift they were expecting to work etc.

paulwf

I pay staff weekly in cash (through the books of course!). It suits me as my cashflow doesn't get a big monthly hit and it reduces my bank charges (my bank charges both for paying in them paying out again). It suits my staff as they get an immediate reward in return for their work, if I waited until the end of the month then paid 2 weeks later by BACS there isn't such a direct link to the work they've done.

Basically it is horses for courses, I have a young mostly part time workforce who want cash in their pocket to take down the pub, if your staff are old er and full time and more interested in paying their mortgage a monthly BACS may suit them better.