Moving pay to 6 weeks in arrears

clarity123

My company has recently said they want to move everyone’s pay from 28th month to 10th of following month. This means we won’t get paid for the month while they make the shift. Then we just get paid for one month on 10th of following month. E.g paid on 28th Feb for one month, then no pay in March, then get paid for one month on 10th April. From this point on paydate moves permanently to 10th. The justification is that for hourly staff in the business they want more time at the end of the month to calculate accurate pay, but they would move all staff even on fixed hours to same system. I worry that it will cause me hardship not getting paid for 6 weeks and then only getting paid for a month with no compensation for the shift. I don’t think my landlord will accept pay after 10th of following month and I worry I will always be behind with my payments. Has anyone else experienced this? 

Savvy_Sue

Ask if this can be phased over a longer period, and ask if it can be delayed to give everyone a chance to plan.

Sandtree

clarity123 said:
Has anyone else experienced this? 

Yes, after a merger our salaries were harmonised so there was just one payroll... in that case they changed both companies payrolls to align it to the ultimate parent companies date. Were given a couple of months notice so was able to save a bit of a buffer but it was difficult for a bit and eroded savings

Also at the same company December pay was brought forward, so still got full months pay but was on 16th rather than 28th and so arguably a good thing but people were always bad at budgeting remembering the money had to last 6 weeks rather than 4.

Many people do experience it too when they change jobs because different employers have different pay days... you could argue that some of those have done it by choice but many don't change jobs voluntarily and lets be honest, even if you do change jobs what date will be payday is not normally one of the deciding factors on what job you'll take.

400ixl

What is the health of the company like? Seems a strange justification as they would be reconciling hours on a weekly basis in most businesses with hourly workers.

Are they having cash flow issues?

clarity123

Thanks for your comments. No it seems cashflows are good. But the payroll team is small and I get the idea they don’t want to invest in a quicker system or more IT so they’re leaving 10 days to calculate the hourly pays because this what fits with the current team’s capacity. I was also worried as it means being paid out of the end of the tax year so given the dates they have in mind then next tax year there’s only 11 months pay until the system syncs the following year. 

chrisbur

When exactly is this going to happen?  In the first post you say no pay for March but then say in last post only 11 months in next tax year.
If it is going to be no pay in March you should ask the employer if they plan to run a March payroll with nil gross for everyone otherwise most will not get the last month tax allowance and will have to wait months for HMRC to refund.

clarity123

Thanks, so last pay under end of month is going to be in March, then no pay in April and then payment effectively for April to be paid in May. So it means that next tax year there’ll be only 11 months payment (and no bonus as these come in March). Then there’s the potential for issues with mortgage providers or landlords seeing 11 months pay and EU settlement needing to see continuous NI contributions so not sure if this is a problem. It seems really late to pay in arrears after the end of tax year and not sure if that’s normal or not for industries with flexible work contracts like manufacturing, hospitality and retail.

clarity123

Re bonus payment - currently in March but in new system it moves to April (hence no bonus in next tax year). Also seems weird that new staff on fairly low pay (just above minimum wage) would wait 6 weeks for first pay check?

Sandtree

clarity123 said:

Re bonus payment - currently in March but in new system it moves to April (hence no bonus in next tax year). Also seems weird that new staff on fairly low pay (just above minimum wage) would wait 6 weeks for first pay check?

That depends when they start, if its the 1st of the month then yes, if its the last week of the month then its 3 weeks. 

With many places if you start within a week of payday its too soon for Payroll to have everything setup and so people having to wait 5.3 weeks is as common in places that pay at month end

400ixl said:
Seems a strange justification as they would be reconciling hours on a weekly basis in most businesses with hourly workers.

In my first job you got paid on the last working day of the month with basic pay up to the 4th Friday of the month, overtime up to the 3 Thursday of the month and commission up to the 16th of the month... it made it very difficult to track if you were actually being paid correctly or not especially as overtime cut off was for your managers submission of it not your working of it so if your manager was off sick or just too busy they may have missed the cut off for some of your overtime (they could submit at whatever frequency they wanted)

How strange it is depends somewhat on the complexity of the pay and if they are paid in complete weeks or months. When you factor in double bank holiday times, banking time etc its not a large window if its to month end 

chrisbur

First payday May 10th means that you will get two month's tax allowance for that payday so tax for most will be lower.  
As far as having 11 months pay for the year this happens to some people when they change jobs so would assume an explanation and perhaps payslips showing normal monthly pay would sort this.  Perhaps suggest to employer that if needed they supply a letter advising what has happened.

getmore4less

Sounds like the pay period is not changing(presume calendar month) just the pay day for that period.

Typically people tend to run their budget such that March pay is to cover April etc...

then a lot tend to align their outgoing to the pay day by moving the pay date into the next month and over a week that is likely to hit anyone that has no buffer

There is a 30% buffer needed for regular spends and probably a lot more for some people that have aligned the major outgoing to early month.

One option might be to see if there is the possibility of a cash advance of say 50% to get people through then have that paid back over say 5(10%pm) or 10(5%pm) months within the same tax year to allow people to sort out their cashflow and get to the point where the pay on the 10th is to cover the following month or just juggle the outgoing to fit the new dates..

Could make it optional so those that have the buffer funds can pass.

Another option here is to grab a 0% spends credit card and manage the cashflow with that.

Put as much regular spends on the card to have enough retained  to cover the bills that will come at the beginning of May before the 10th.