Pay Frequency And Nigerian Employee Financial Wellbeing

Pay frequency is how often an employer pays their employees.

It determines how often an employee receives their wages and, for the most part, how often an employer must run payroll notwithstanding off-cycle payments i.e. payments outside an employers normal pay schedule including bonuses or 13th month payments.

Determining pay frequency.

The predominant pay frequency for employees in Nigeria is monthly, bi-weekly or weekly with monthly seemingly the overriding majority for formal workers.

Monthly pay frequency implies running payroll 12 times a year, bi-weekly 26 times a year and weekly 52 times a year. In casual jobs it's possible for more frequent pay to occur including daily. Whichever pay frequency an employer chooses for their business is influenced by the Nigerian Labour Act which states the following for the periodicity of payment of wages:

"Wages shall become due and payable at the end of each period for which the contract is expressed to subsist, that is to say, daily, weekly or at such other period as may be agreed upon:  Provided that, where the period is more than one month, the wages shall become due and payable at intervals not exceeding one month".

Essentially an employee must be paid, at least, once a month. So, for the most part, an employer can determine which pay frequency to use for their business so long as they adhere to the Labour Act.

How does pay frequency affect employers and employees.

For Employers

Processing payroll generally has a cost associated with it and this can additionally determine the pay frequency an employer eventually chooses for their employees. Costs can include:

⦿ Pay transfer costs into a bank account

⦿ Charges by banks.

⦿ 3rd party payroll software costs.

⦿ Employee cost for running payroll particularly if an outsourced function.

⦿ Issuing paper cheques or / and payslips.

⦿ Working capital availability and more.

Generally the cost of running payroll increases with frequency. So it's easy to see that an employer running payroll monthly would be less expensive than running payroll weekly with bi-weekly sort of the middle ground cost option. In other words the chosen pay frequency for a business will depend on what the law says, how much time & money can be spent running payroll, what frequency will their employees appreciate and any other unique considerations such as how bonuses or overtime are calculated and paid.

For Employees

An employee uses their pay to maintain and enhance their standard of living whilst, ideally, putting some pay aside for a rainy day as savings or investment. That being said, unplanned expenses and emergencies occur at anytime. Having money on hand can mean the difference between paying a bill on time and mitigating a late fee from occurring or halting a small unplanned expense ballooning into a larger costlier amount. It's no wonder that the timing of pay can be a crucial determining factor in keeping us from tipping over into difficult to manage debt. Of course as an employee we should adhere to some good habits such as those mentioned in our blog The art of saving to reduce financial shocks.  However if an employee is yet to develop such habits that doesn't mean they are consequently abandoned rather they should be helped to cultivate such habits.

Wagefit improves pay frequency and more.

By providing an alternative path for employees to access a portion of their earned unpaid wages, if needed before payday.

Financial stress can occur at anytime. Give your workers options to alleviate their stress and the outcome will be noticeable in your workplace environment such as improved productivity & engagement, reduced attrition & absenteeism and overall a better financial wellbeing for your workers.

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‍Wagefit is a B2B2C Earned Wage Access provider. We partner with employers to make this benefit available to their staff.