We know that managing budgets in an ever-changing and increasingly complex economic environment can be difficult. Within the UK cleaning sector that has many staff on irregular hours and pay, this can be particularly challenging for both employers and staff. A key issue is the high staff turnover that can often be triggered by fluctuating finances and demands. Annualising your employee’s pay can help alleviate these challenges by creating more stability for both employees and employers and whilst it’s not completely new to the industry it has been gaining more traction. As with all processes there are pros and cons and in this month’s blog, we explore the impact annualised pay can have on both employers and employees.

Employer Benefits:

• Simplified wage forecasting and budgeting to improve cash flow management and financial stability for contract-based operations.
• Stable and predictable salary can be appealing to employees, making roles more attractive and reduce costly staff turnover.
• Flexible scheduling, allowing employees to work a fixed number of hours over the year rather than fixed hours each week can help meet variable client demands and seasonal peaks without additional cost.

Watchouts:

• Calculating and managing annualised hours for employees who work irregular hours can be more administratively complex, resulting in potential payroll complications.
• Risk of overpayment if employees don’t work their expected annual hours or leave the business. Employers may still need to pay their set annualised salary leading to potential losses.
• In a sector where labour needs often fluctuate, committing to an annualised salary may increase the complexity of adjusting pay in relation to holiday pay, affecting profitability.

Employee Benefits:

• Employees receive consistent income regardless of seasonal fluctuations or varying weekly hours, helping to make monthly budgeting, and borrowing less stressful.
• Paid time off and benefits as annualised pay agreements can include things like regular holiday pay and pension contributions. This can enhance job security and satisfaction which are more commonly associated with salaried positions.

Watchouts

• Employees may be asked to work longer hours during peak periods, leading to potential work-life balance concerns.
• Employees may find it challenging to track hours over an entire year to ensure they aren’t working more than agreed, especially if they are unfamiliar with annualised pay structures.

For contract cleaning companies annualised pay can offer financial stability, flexibility, and a compliance with fair wages laws ensuring minimum wages and overtime are paid correctly. With the rise of digital workforce management tools and an increased focus on compliance, it is fast becoming the preferred solution. However, it’s success often depends on choosing a software solution with the right functionality and how well both employers and employees understand and agree on managing annualised pay.