Tesco has announced a new way to help colleagues in the UK with unexpected or large expenses by offering them access to a low cost advance on their pay. The UK grocer has introduced a new colleague benefit that will enable around 280,000 colleagues to get up to 25% of their contractual pay early.
The advance, which costs just a single set fee of £1.49 per advance to financial employee benefits partner Salary Finance, is to help colleagues avoid having to take on expensive debt with high interest payments, such as pay day loans. Colleagues will be able to apply online for an agreed percentage of their earned pay following a simple process and the money will be paid to them within 24 hours and can often arrive within minutes. The amount will be automatically repaid at the next pay day, and they will be allowed to take one advance per pay period.
The latest benefit adds to a wealth of help and advice Tesco offers its colleagues to help with their financial wellbeing. The grocer announced a second pay rise in a year for hourly-paid colleagues in October, boosting pay by nearly 8% over the year. In addition, Tesco gives colleagues a 10% discount on groceries, which increases to 15% every pay day weekend. During the key Christmas shopping period from 13-19 December, the discount will double to 20%.
Tesco also offers financial help and education from Salary Finance and Legal & General on subjects including developing better money habits, alternatives to high cost borrowing and help with building savings and planning for retirement. There are also signposts to support for colleagues, such as the Employee Assistance Programme and MoneyHelper to support with any financial questions.
Tesco successfully trialled Pay Advance with more than 6,000 colleagues working at large and convenience stores in Liverpool over the past year, with 51% saying they used an advance to deal with an unexpected expense. A figure of 77% of colleagues said the new benefit made them feel more positively about Tesco as an employer. The average size of the advance was £99.
Feedback from one colleague in Liverpool who used the scheme said it was a ‘great idea and one that I hope stays around for colleagues in the future’, while another commented that the advance ‘meant I didn’t need to borrow from family or use a lender with unreasonable charges again’.
Tesco has partnered with Salary Finance, who manage the scheme and receive the small fee for each salary advance. They are authorised and regulated by the FCA.
James Goodman, UK People Director, Tesco, said: “We know that colleagues can face unexpected bills, such as car repairs or replacing a washing machine, which can leave them short.
“To give them a helping hand with their financial wellbeing, we have launched Pay Advance to give them a simple and low cost way to access some of the money that they have already earned. We hope this helps to support colleagues, particularly in the run up to Christmas.”
