Paying your employees on a monthly rather than a weekly basis can save your business money and help increase your cash flow. While there are obvious benefits for your company in switching from a weekly to a monthly payroll, your workers -- who will be forced to survive a month on a week's wages -- are likely to be concerned about how they will make ends meet while the change is being actioned. It's important that you take steps to support your workforce during the switchover period.
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Enter into a 30-day consultation period with your staff about the benefits of switching to a monthly payroll cycle and look to allay any fears that arise before setting a date for the changes. Explain that the switchover will not affect their salary and other benefits and will result in efficiencies for the business. Solicit feedback from your workers about how they feel the changes will affect them. Consult on the best time to introduce the new monthly payroll system and ask if your employees would be in favour of phasing the changes in by switching to bimonthly pay initially. Encourage your staff to appoint a committee that is responsible for presenting any concerns to management.
Offer temporary bridging loans to any employees who say they will be unable to cope during the switchover period. Most people would struggle to make it through a month on one week's pay, so you'll need to provide support to those workers who don't have any savings to fall back on. Provide the loans on an interest-free basis and allow employees to pay back any money borrowed at a manageable rate from future paychecks.
Listen and react to any concerns from your staff. If worries are raised about the timing of the proposed change, consider postponing the switchover to a more appropriate time. For example, going from weekly to monthly pay just before Christmas or over the summer holiday period could exacerbate problems for your staff.
Review the results of your consultation exercise and draw up a plan of how and when you're going to make the switch. Try to be as accommodating as possible to your staff, as they will be most affected and inconvenienced by the change.
Communicate when the change will take place to your staff and make clear that assistance will be made available to anybody who needs it. Provide a process whereby worried employees can speak to management confidentially about how the changes will affect them financially. Make sure that continued support is available to your staff throughout and beyond the switchover period.
Instruct your payroll department or external payroll partner to instigate the changes. If you're running a small business and take care of your own payroll, you can change the pay frequency in your accountancy software. The method for doing so will depend on the program you use.
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