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Rethinking Pay: Why access matters in a cost-conscious economy

When we talk about pay, the conversation almost always starts with how much someone earns. And rightly so—total compensation is central to financial security and job satisfaction. The 6.7% April increase to the over 21s National Minimum Wage is a welcomed boost for nearly two million people across the UK. For employers, however, rising payroll costs, increased National Insurance contributions, and persistent economic uncertainty are making it harder to offer raises beyond the statutory minimum.

A recent study by Income Data Research found that four out of five businesses expect to offer lower pay increases in 2025. In this climate, employers are looking for new ways to enhance the employee pay experience without necessarily hiking base wages.

To do this, it is important to consider how and when an employee is paid, not just how much. 

If you were struggling to make it to payday, can you imagine being given a cheque at 5pm on Friday just as the banks were closing? 

One 2022 study found that 17% of businesses still using cheques did so because they delayed money leaving their account, which of course delays when an employee can access their earnings. Thankfully, today, most workers can expect their wages to seamlessly land in their bank account via BACS transfer before they have woken up. But while technology has smoothed out the process, timing remains a significant issue for many employees.

Payment frequency varies widely. Most UK workers are paid monthly, with around 15% paid weekly and another 5% fortnightly. Even though about a third of workers would prefer to be paid weekly, many businesses continue to move toward monthly pay cycles due to the administrative costs and complexity of more frequent paydays.

This growing disconnect between work and pay has led to increased interest in flexible payment options like On-Demand Pay, also known as Earned Wage Access. This service allows employees to access a portion of their accrued earnings before payday, typically between 30% and 50%, for a small flat-rate, ATM style fee. 15% of all UK employers now offer this, and in some industries such as hospitality, retail, and care, this number is a third.

It’s more than just a convenience: over half of people would rather have access to On-Demand Pay than receive extra holiday days. That’s a compelling statistic, especially at a time when more companies are finding it harder to maintain enhanced pay rates. Last year, for example, BrewDog made headlines for stepping away from its Living Wage commitment, and 4.5 million new UK jobs were created at rates below the National Living Wage, 800,000 more than in 2023.

In such an environment, offering employees financial flexibility with On-Demand Pay may provide a much-needed edge in recruitment and retention. The benefits can be significant; some employers who offer On-Demand Pay have seen up to a 50% reduction in staff turnover. While salary is still the top reason people stay or leave, it’s clear that it’s not the only factor. When employees feel more in control of their finances, they are less likely to experience burnout, absenteeism, or distractions caused by financial stress.

As employers navigate rising costs and shifting expectations, compensation strategies must evolve too. Offering more flexible pay, even without raising total pay, can be a meaningful way to support employees’ financial wellbeing.

To learn more about On Demand Pay benefits for your people, speak to one of our sales team and book a demo.