Why do employers sometimes pay a month in hand?

nicksavvy

Hi guys,

Question as above really. Refers to new employees at a company.

To clarify 'being paid a month in hand', here is an example of what it would be:

May 17th : Start Work
May 30th: No Pay
June 30th: Paid for work between 17th and 30th May.
July 30th: Paid for work between 1st and 30th June.

Seems an odd one and Ive never been sure why exactly it's done.

Cheers for any help!

HappyMJ

nicksavvy wrote: »

Hi guys,

Question as above really. Refers to new employees at a company.

To clarify 'being paid a month in hand', here is an example of what it would be:

May 17th : Start Work
May 30th: No Pay
June 30th: Paid for work between 17th and 30th May.
July 30th: Paid for work between 1st and 30th June.

Seems an odd one and Ive never been sure why exactly it's done.

Cheers for any help!

Several reasons...they could withhold pay if employee quits without notice. Paying after the client has paid improves cashflow. The company saves money on the loans required to pay employees before clients of the company have paid invoices.

If you need cash most employers are reasonably understanding and will give you an advance on your next pay.

LMH67

nicksavvy wrote: »

Hi guys,

Question as above really. Refers to new employees at a company.

To clarify 'being paid a month in hand', here is an example of what it would be:

May 17th : Start Work
May 30th: No Pay
June 30th: Paid for work between 17th and 30th May.
July 30th: Paid for work between 1st and 30th June.

Seems an odd one and Ive never been sure why exactly it's done.

Cheers for any help!

I'm finding that one a bit strange. I can understand missing the May payroll as they all have their cut off's which I would guess is around mid month which you must have missed.

But, you really should have been paid for your work in May & June in the month end June payroll - that is what is meant by working a month in hand. July payroll would then be all of July's work.

What's in your contract but I would be checking this out.

shmeeko69

nicksavvy wrote: »

Hi guys,

Question as above really. Refers to new employees at a company.

To clarify 'being paid a month in hand', here is an example of what it would be:

May 17th : Start Work
May 30th: No Pay
June 30th: Paid for work between 17th and 30th May.
July 30th: Paid for work between 1st and 30th June.

Seems an odd one and Ive never been sure why exactly it's done.

Cheers for any help!

It's a sort of guarantee for the employer that, you'll not leave after a few days and that you'll see out your first few weeks. It kind of eliminates the time-wasters and gives the business added piece of mind.

It's frustrating for the employee especially if you're short of cash, but you know that when you accept the job.

nicksavvy

It's not actually my situation, it was just an example because I'm curious to know why it's done.

But I was always under the impression that this was how it worked: you then receive your 'month-in-hand' pay after you leave the job.

As the kind poster above said, this would help to avoid employees leaving without notice if they had just being paid in full.

Prothet_of_Doom

You are paying your employer's cash flow. Multiple the Salaries of all the employees, and that's how much Working Capital He'd have to find.

10 people = say £20K
100 People = say £200K

He'd have to get credit he'd have to pay for, and it wouldn't be cheap.

Plus from an admin point of view if they pay by the hour they have longer to work out the figures.

makeyourdaddyproud

I've heard of a week in hand but a month is unacceptable.

Southend1

makeyourdaddyproud wrote: »

I've heard of a week in hand but a month is unacceptable.

I've never known any salaried jobs that are paid in advance. It's always monthly or 4 weekly in arrears

AP007

nicksavvy wrote: »

But I was always under the impression that this was how it worked: you then receive your 'month-in-hand' pay after you leave the job.

Well you hope you would. What if they didn't pay after you left?

At my old co the cut off was the 20th of the month and we got paid on the 25th for the whole month so for example September would be from Saturday 1st to Monday the 30th.

On the 25th you get paid the whole month so it you never came back in on the 26th you then owe the company 2 days (as two are the weekend). This may be ok if you holiday to come to you etc so they would probably not be out of pocket.

If you put in your notice on the 1st day of September on the 25th you get paid till this date and then on the last day you get a cheque for the remainder of the work and holiday.

That's how I have always had it at all companies I have worked for and never heard of working a month in hand.

Southend1

Southend1 wrote: »

I've never known any salaried jobs that are paid in advance. It's always monthly or 4 weekly in arrears

Oh wait I think I misunderstood. So by payday you're owed 2 months wages and get paid for one so there's always a month "in hand". Sounds unfair. How are you supposed to survive the first 2 months of a new job until you get paid?!

InsideInsurance

Southend1 wrote: »

I've never known any salaried jobs that are paid in advance. It's always monthly or 4 weekly in arrears

Every salaried job I had was part in arrears and part in advance. So you were paid on the 25th of the month for that whole month (ie 3 to 6 days of it was in advance)

To work effectively 2 months in arrears would be harsh but ultimately if thats what your contract states I doubt there are any laws against it.

Of cause if you leave and start working somewhere else with a more normal payment cycle it means the first month will be good with both your new salary and the "in hand" being paid from the old job.