Money helps to sustain your employees’ lives and is a driving force that impacts many of their choices outside of work. It is also a determining factor when they are choosing a place to work. Your employees are a crucial part of growing and sustaining your business, so if their income affects their security in any way, it’s going to impact their productivity. This means that their pay is directly related to the overall success of your business.
There are also potential legal ramifications of not paying your employees on time that could result in penalties, fines, and a damaged employee-employer relationship. These are issues that can be easily avoided by sticking to a strict pay period schedule.
With that being said, here are some reasons why you should pay your employees on time:
Nearly every state has laws in place to ensure that employees are paid twice a month or every other week. Other states only require weekly or monthly payments. No matter what the state requirements are, there are procedures set in place in the event of a missed or late paycheck.
Employees have the right to file a claim to their state employment agency. This often results in an investigation of the business. The outcome of the research can lead to a lawsuit against the employer or possible forfeiture of their business license. Not only will the business owner need to pay the employee the back owed amount but they will also likely end up paying fines and penalties as well.
If you find yourself in a situation where you are unable to pay your employees on time, the first thing you should do is examine your business model and determine where other costs can be cut. Just remember that your employees are your most important asset, so it is essential to keep them happy by paying them for the work they have done.
More Productive Employees
As I mentioned earlier many employees rely on a stable paycheck. If you are not paying them consistently you may suddenly find yourself losing your best employees which are the driving force behind your success.
By paying employees on time consistently, you are essentially saying that you appreciate their contribution to the workplace and want them to remain employee at your business. This, in turn, will make employees want to stay in their jobs long-term.
Employees can spend more time focusing on their job and will have fewer worries about their financial security. Since they are not worried about their finances, they can be more present in the workplace leading to higher productivity and quality of work.
Save On Hiring costs
When your employees are not paid on time, they are more likely to quit and find another employer. The resulting cost of that employee leaving due to not being paid ends up being far greater than merely paying the employee in the first place. Below are just some of the costs to consider if you were to lose an employee and have to find another to replace them.
- Lost productivity – It may take a new employee several months to years to be as productive as their predecessor.
- Training costs – This includes training on new procedures or software.
- Workplace culture impact – Other employees might be affected by the high turnover rate.
- Hiring costs – This includes job advertisements and the time spent interviewing and screening potential applicants.
It is clear to see how heavily not paying your employees on time can impact your business. You should always have a business plan in place to ensure that your employees are paid on time, every time. The benefits of doing so far outweigh the potential repercussions. So do yourself and your employees a favor and have a sound financial foundation in place to guarantee the success of your business.