Hands up if you pay cast
Page 61
If you've noticed an error in this article please click here to report it so we can fix it.
Don't leave it until a masked gunman demands this of you — cheque payments are a whole lot safer. Here, bank manager David Edwards suggests how you can make the change
THE OLD SAYING money is the root of all evil is never more appropriate when it comes to the practice of paying employees Neekly in cash.
Hardly a week goes without us nearing of a wages snatch in Nhich someone gets badly hurt. Last year one security company alone was the victim of 87 attacks, and violent raids on company premises are happening more often.
Is there a way of avoiding this langer while ensuring that employees are paid regularly and afficiently? The answer is to en;ourage employees to accept Jayment by cheque. Even today about half the workforce in 3ritain is still paid weekly, with .cash in a pay packet.
Changing to a system where amployees are paid by credit :ransfer direct into their own Dank accounts effectively stops :he bandit and can save a company a lot of money.
Research has shown that an amployer, on average, saves £30 )er employee a year if he ;hanges from weekly cash payments to monthly payments iirect into the employees' bank accounts. The cost is sometimes much higher, depending on indiridual circumstances, and can anly increase with inflation.
So what are the costs involved n the payment of weekly Nages? There are the direct expenses of running a large wages pffice, the insurance, and the cost of physically transporting the cash from the bank to the pffice or factory each week. There is also the cost of drawing money from the bank, one or two days before it is needed, to count into wage packets.
Data processing, using the Bankers' Automated Clearing Services, makes the exercise 3moother. Money is put into the amployee's account the same day as it is taken out of the employer's account, so improving the company's cashflow and saving interest charges. It is also much cheaper than the cash handling charges made by the banks.
Wages are usually paid one Neek in arrears. Paying fortnightly means the gap in which the money can be used by the ;ompany is doubled, while paying employees monthly widens this gap even further. Once again the company's cashflow will benefit.
This is, of course, fine for the company but what about the employee? Under the law, an employee has the right to insist on wages in "the coin of the realm". In other words — cash in hand.
Up to the beginning of the nineteenth century it was possible for employers to pay their workforce in tokens which could only be spent at the company's shop and even payment in kind was made. In 1831 the Truck Act was passed prohibiting employers from imposing restrictions on where or how wages were to be spent. It also required them to be paid in cash.
The 1960 Payment of Wages Act went some way to relaxing these restrictions in enabling payment to be made to a bank account — provided a written request was received from the employee. But why should employees agree to be paid at less frequent intervals, through a bank account? Persuading employees to accept cheque payments could be accomplished by passing some of the cost savings back to the workforce as an incentive.
Of course, if an employee has budgeted for years on the basis of weekly wage it can cause havoc to switch suddenly to fortnightly or monthly pay. One company, in passing some of the savings back, will deduct £5 per week for ten weeks from pay packets before a changeover, then will add £50 to the sum saved to tide employees over the first period of fortnightly pay.
Over the next ten fortnightly periods there will be a further deduction, with the company contributing a similar sum for the final switch to monthly pay.
The whole exercise can be achieved in 30 weeks, with the minimum inconvenience to the employee. Other firms are passing on their cost savings in other ways, such as interest-free loans for staff. One company is giving a £60 loan repayable ove months and if the employ still there after two years, sum is returned as a loyalt) nus. Another company is I going so far as to raffle a each year among all moi paid employees.
There is also a valuable br from the trade unions' poi/ view. Monthly pay can n staff status — with the bene. four weeks' notice and/or sick leave and holiday en ments, as well as improved sions.
Such steps have longer-1 implications. Moving to a si payment system for "blue" "white" collar workers couli cilitate uniform condition: service with improved job SE ity. Having two paym systems is socially divis while the move from cash courages saving and final responsibility.
Having money paid dir into a bank account is safer, ply because there is no packet to be lost on a bu snatched in a crowd. There record of money paid ir drawn out of the bank by m of a regular statement w makes it easier to budget ahi
Bank accounts also make i sier to pass money to SOME else, either by cheque or I standing order at the ban make regular payments suc HP, gas, electricity, rent oi surance payments. It is rr less bother than paying f4 postal order or taking cash ir busy showroom.
Having a bank acco smoothes the way to appl for a bank loan, as the custc can also establish a g relationship with his or her b This is a very useful if there need to borrow money fr major expense later on.
Employers can also s money and time by changinc timing and method of pa employees. By so doing, will run their companies r efficiently and profitably.
Barclays High Street have duced a free booklet In Pia( Cash — Introductory guide for Employers which can br tamed from: District Sup Group, Barclays Bank Lim Juxon House, 94 St Pa Churchyard, London EC4NI