Canadian HR Reporter

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To see what's new, go to www.carswell.com/pocket-ohs eBook available for web browser or download to your desktop, laptop, iPad or Android tablet.* Learn more at carswell.com/proview *eBook not available to trade bookstores, third-party distributors, academic institutions, and students. Order # 987844-65201 $23.95 Softcover approx. 1080 pages March 2017 978-0-7798-7844-4 Also available in French. Call for details. Also available Large format edition with tabs Order # 987846-65201 $23.95 Softcover approx. 780 pages March 2017 978-0-7798-7846-8 Also available Shipping and handling are extra. Price(s) subject to change without notice and subject to applicable taxes tandem with common payroll systems and includes measures designed to encourage finan- cial wellness and discourage impulse spending — all while working towards reductions in absenteeism, theft and the need for payday loans, he said. "We developed numerous con- trols in the program to ensure that (this) is a financial wellness solution and not something that drives compulsive behaviour." Daily pay apps help workers to avoid unnecessary expenses in- cluding overdraft fees, penalties or credit line interest, said Jason Lee, CEO of DailyPay, a New York-based financial technology company. "Most people get paid once ev- ery two weeks but their financial obligations actually occur within those two weeks or throughout the month," he said. "Most people can't pay their bills on time and are actually fi- nancing themselves through late fees… at was really the problem that we're trying to eliminate: Can we use technology in some way to essentially give the employee con- trol over when it is they actually got paid?" Benefits for employers Employees aren't the only ones who benefit from a daily pay op- tion — employers using the tech- nology have reduced turnover by 41 per cent, said Lee, citing Dai- lyPay statistics. "at is an enormous amount of cost savings," he said. "e com- panies that we work with are now able to take a bunch of money that they've now saved, redeploy that into their own business, and be- come more competitive on their own pricing, their own product offerings." "When you give the employee the control over when it is that he or she gets paid, they actually stay longer at a company," he said. "If you empower the employee through technology to be able to control when it is they actually do get paid, believe it or not, that means they stay longer at a com- pany. And when they stay longer, that means that the company can realize a bottom-line benefit in the form of increased retention." But expecting loyalty from employees who are nearly up- to-date on payroll is tough, said Wendy Giuffre, an HR consultant at Wendy Ellen Inc. in Calgary. "I think maybe at the beginning, it sounds cool," she said. "It'd be one of those new, cool HR things, but I haven't been able to figure out how that would create loyalty." "It would be an attraction tool at some of those kinds of places… in those industries where it's typi- cally either second-income earn- ers or younger kids, where that kind of mechanism would be more appealing." "It's like when (employers) went to unlimited vacation," said Giuffre. "It has caused a number of administrative headaches and problems. I think this is another one of those interesting trends, and maybe one day that will be the status quo." Strapped for cash While allowing workers to access their funds on an as-needed basis is helpful, it still doesn't solve the ultimate problem, said Steven Van Alstine, vice-president of educa- tion at the Canadian Payroll As- sociation (CPA) in Toronto. "My concern would be that hav- ing more frequent access to your net pay is not going to necessarily take away the fact that people are living paycheque to paycheque," he said. "At the end of the day, you're going to get the same amount of net pay." Nearly half of Canadian work- ers live paycheque to paycheque, and would encounter difficulty meeting financial obligations if their pay was delayed by as little as one week, according to a 2017 CPA survey of 4,766 workers. For millennials, that number rises to 55 per cent. Additionally, 94 per cent of respondents carry debt, including mortgages, credit cards, car loans and lines of credit. Instead, the CPA says more awareness is needed, alongside a behaviour change, if Canadians are to adopt more appropriate saving measures and pay off debt. "Financial planners suggest 10 per cent of earnings be allocated for longer-term savings or for re- tirement," said Van Alstine. Before a company considers adopting daily pay as an option, employee education is critical, as it would be much easier for em- ployees to squander their wages, said Giuffre. "ere has to be huge education if a company was to implement something like this... even a pretty solid sign-off that the employ- ees understand this concept," she said. "It's very easy to go through $150. Come the end of the month, where's the money for your bills, your mortgage, (if ) you've squan- dered it away on a daily basis?" Sixty-two per cent of employ- ers process payroll on a biweekly basis, according to the CPA. Eigh- teen per cent pay weekly, 13 per cent semi-monthly and six per cent monthly. "From a business standpoint, the traditional pay system is beneficial because it maintains cash flow a little bit longer," said Giuffre. e future of pay? For employers struggling to re- tain workers, however, daily pay has caught on with high-turnover companies such as cleaning com- panies or call centres, said Lee. "is is not for everyone," he said. "is is one of many tools in the toolkit to improve retention." "is is bleeding-edge technol- ogy. Early adopters in this type of product, they will absolutely be the ones who are winning." e idea of payroll cards was originally floated several years ago, but never really got off the ground in Canada, said Van Alstine. "Most Canadians have bank ac- counts, and particularly working Canadians," he said. "Because we have such a high penetration of electronic funds transfer, and it's usually an employment require- ment to have a bank account so that your paycheque can be depos- ited directly in there, there wasn't as much of a need for the pay card or the technology of a pay card." But the introduction of payroll cards was only the beginning of a new movement, said Barha. "While payment by payroll card versus paycheques was a step in the right direction, we've rolled out the future of how we pay employees." Education critical prior to adoption DAILY PAY < pg. 1 Nearly half of Canadian workers are living paycheque to paycheque.

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