Legislation Proposed for Salary Payments in Periodic Installments Rather Than a Monthly Lump Sum
Changing the Way We Get Paid: The On-Demand Salary Split Proposal
Stirring up conversations, a proposed law suggests the option to split salaries into multiple installments, as reported by France Inter on May 6. Expected to be put forth in the National Assembly within ten days, this idea comes from Paris EPR deputy Jean Laussucq.
Currently, employees can only request the advance payment of half their salary on the 15th of each month. Laussucq's goal for this bill is to alleviate the financial stress experienced at the beginning of the month, as evidenced by a decrease in the gender wage gap from 1995 to 2023, according to an INSEE study. French citizens are reportedly shelling out a whopping "seven billion euros in banking fees or charges" annually.
The idea of on-demand salary splitting, often referred to as Earned Wage Access (EWA), is already being implemented in more than a thousand companies using platforms for advance salary payments. These services enable employees to access their wages for the work they've already completed immediately rather than waiting for traditional monthly paydays. Yann Le Floc'h, CEO of Stairwage – an app facilitating advance salary payments – argues that this rigid system from the past should be replaced, stating, "Is it fair that today, employees are effectively lending their employer 30 days of work?"
The demand for on-demand salaries is increasing among employees. But it's essential to weigh the financial implications. While EWA offers workers flexibility, fees associated with these services can be steep, sometimes reaching 300% APR. Greater financial literacy and transparency from both employers and providers are crucial to making informed decisions.
Offering EWA might improve employee satisfaction and retention, and it could help attract talent by offering more flexible compensation options. However, integrating EWA into existing payroll systems may require partnering with third-party providers and assessing the operational feasibility and associated costs.
In any case, the broader trend in instant payment adoption will undoubtedly shape how we manage finances, and EWA is no exception. Both employees and employers must carefully consider the financial implications and operational requirements before diving in. Keep an eye on this evolving landscape as more companies continue to explore the potential of on-demand salary splitting.
Employee Jean Laussucq from Paris, France, is proposing a law to allow for the on-demand splitting of salaries, aiming to reduce financial stress at the beginning of the month and potentially close the gender wage gap by 2023. This idea, known as Earned Wage Access (EWA), is already being used by over a thousand companies through advance salary payment platforms. However, it's important to consider the financial implications, as the fees associated with EWA services can be high, sometimes reaching 300% APR. Companies should assess the feasibility and costs of integrating EWA into their payroll systems, while employees must ensure they understand these fees to make informed decisions. The broader trend in adopting instant payment solutions, such as EWA, will significantly impact personal-finance and business management in the future.
