HR, Payroll

A Guide For Employers & Employees When Working A Week In Hand

Allison S Robinson | 1 April 2022 | 2 years ago

A Guide For Employers & Employees When Working A Week In Hand

What Does It Mean To Work A Week In Hand?

Working a week in hand is a straightforward concept and used to be considered common practice by a lot of companies. It is still prominent in a lot of businesses throughout the UK today although it is not as popular as it once was. To work a “week in hand” is when an employee gets paid for work they completed in a previous pay period; in this case, a week. You might be able to see some cases where employers request that their employees work more than a week in hand but this is not so common and generally not recommended.

I will give you a clear example of how working a week in hand works in principle, if you started working at a company on the 1st day of the month, you would receive your salary for that week either on or around the 14th of that month and not the 7th. This means that you would be owed money for the first week you started working for the company, thereby receiving one week’s pay in your first payment after working two weeks. This payroll model is also referred to as being paid, “one week in arrears”, or a week “lying on”. This payroll model should not be that hard to identify, since all you have to do is have a look at your payslip and see what period of work the salary covers.

Paying employees this way is pretty commonplace in the conventional workforce. It might surprise you to know that this has its advantages for household employment, as well. For instance, nannies or other types of household employees are often paid this way, too. That is mainly because this type of payroll system tends to suit such a job the most (I will get to that in a bit).

Why Does This Payroll System Exist?

Why Does This Payroll System Exist_

This is a fairly common system in the sense that many businesses often opt for setting up a wage calendar this way. For a bit of context, this payroll method has been around for quite a while. Let us take the steel industry for instance:  A regular payday for employees in the not-too-distant past was usually a Thursday, i.e., for the hours worked by the employees as well as their output throughout the previous seven-day workweek. In that regard, beginners had to work on their first week on the job and wait for their payslips until the following Thursday. Their payslips would always be in cash; in a sealed (often brown) envelope that took a handsome amount of time for the pay clerks to make up (for thousands, if not hundreds of employees with several payroll/bonus systems).

However, those who left their employment positions on a Friday would still receive their payslips the following Thursday, considering they had worked an entire week before.  As I already mentioned, it is still a common payroll system where the pay for an employee is weekly and tends to vary with production bonuses (in case that employee has worked overtime).  Employees who are paid monthly can also be on a similar payroll regime, e.g., their monthly payslips are given to them mid-month for having worked the previous full calendar month. This gives the wages department time to calculate the amount to be paid, overtime hours worked, taxes, tips, commissions, etc. It takes from three days to a week for the payroll time to process the established timesheet and set up the bank payment.

What An Employer Needs To Consider When Asking Their Employee To Work A Week In Hand

What An Employee Needs To Consider When They Are Asked To Work A Week In Hand

As I said earlier on, employers often ask their employees to work a week in hand. This gives them time to determine factors like tips, overtime hours (in case the employee has worked overtime), commissions, etc.  In terms of legalities, it is not unusual for employers to establish “lying” times for workers.

The employer holds back the money as security in case the employee leaves without any working notice (which is mentioned in their contract and could be from a week to two months). The employer then pays that security back to the employee towards the end of their time working with them.

This payroll model could often risk creating financial issues for new employees. If such a thing happens, offering an alternative such as providing an early first payment of their salary could financially relieve the employee, provided they agree to this offer.

What An Employee Needs To Consider When They Are Asked To Work A Week In Hand:

Working a week in hand is a common system where the working hours are flexible. The employee also gets production bonuses or commissions for working overtime.  In case you are an employee working a week in hand for your employer, the payroll system should explicitly be mentioned on your payslip. If an employer uses this payroll system and you happen to hand in your resignation at some point you will legally be entitled to the week in arrears in your final pay packet.

Some of the benefits you receive will also stop the moment you start working for an employer using this payment system, rather than when you receive your first payslips. As an employee, you will legally be entitled to an itemised payslip showing the breakdown of your gross payslips. You are also legally entitled to be paid at the current salary rate. Working a week in hand has been advantageous for employees, especially in recent years with the pandemic.

Workers now feel like there has been somewhat of a power shift and feel they can be a bit more choosy about their payslips (especially ones with relevant job experiences), demanding more for hours worked overtime and whatnot. At the end of the day, whether this affects your decision to work for an employer completely depends on you. Consider your financial status, payment preference, and employment goals to determine if this is the right payroll system for you.

The Pros and Cons (For Employers):

Below are some of the benefits and drawbacks of making your employees work a week in hand.

The Pros:

  • This payroll system offers an element of protection (as a security) for the employer in case the employee decides to resign.
  • This allows employers ample time to accurately calculate the employees’ payslip, tips, payroll taxes, commissions and overtime hours worked.
  • This system is a lot simpler compared to the “current” payroll method.
  • If an employee happens to take an emergency leave at the end of a payment period, they would otherwise be overpaid in the current payroll system.

The Cons:

  • Employees can take unfair advantage of the increased bonuses and hours worked overtime.

Pros and Cons (For Employees):

Following are the pros and cons of working a week in hand as an employee.

The Pros:

  • Employees get paid for the extra hours they work at their job when working a week in hand.
  • The work timings are often more flexible with this payroll model.

The Cons:

  • Employees naturally feel like they are working a week for free, the first payslip might leave them feeling disappointed.
  • This payroll method could cause financial problems for new employees.

Legalities and Minor Details:

NMWM09050 – Any payments made during the payslips reference period after employees earn them can be reassigned back to the payroll reference period.

NMWM09030 – If an employee has a payroll reference period of less than a month, any payments made in during the month after the termination of the employee will count towards the national minimum pay in the employee’s final payroll reference period. Whatever payroll method the employer establishes, they will be obligated to pay their employee accurately and promptly to avoid wasting their time.

FAQs

Is it necessary for me to work a week in hand for my employer?

It is your right to find out early on if your employer expects you to work a week in hand. The employer should make this very clear before any contracts are signed and it is your responsibility to know the full terms of your working agreement.

After resigning or terminating a contract are employees paid at the current rate or the rate relevant to their first week of employment?

The employee is entitled to be paid at the current rate by their employer, and it should also be specified by the employer.

Do all employers use the “week in hand” payroll system?

Businesses often pay their employees payslips weeks in arrears. This payroll system is quite common among small businesses.

Is it necessary for employers to mention payroll systems in their employees’ contracts?

Employers must stipulate in their employment contracts how payment is to be made to their employees.

Topic

HRPayroll

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