When B2B ecommerce company IndiaMART announced this weekend that it was moving to a weekly salary pay disbursement regime, claiming to be the “first Indian organisation” to do so, it triggered a debate.

Globally, in countries like the US, New Zealand and Hong Kong a weekly or fortnightly paycheck is par for the course, but in India where salary structures are driven by house rent and EMI needs, it’s certainly a radical move.

Was it brought on by the ongoing Great Resignation or Reshuffle and fierce war for talent? Will it lead to other start-ups adopting this wage mode? 

Independent HR consultant Gautam Ghosh felt weekly wages could become an employee retention tool, though he said such a payroll structure would totally depend on how an organisation’s demographic is. Young employees might like a weekly payout while older workers would prefer a monthly paycheck. Also, only companies that are cash flow positive or heavily funded might be able to transition to this move.

Instant Gratification

Explaining the rationale behind the move, Dinesh Gulati, COO of IndiaMart, said that instant gratification is what every employee expects and the company believed the move would be appreciated. “Paying employees on a weekly basis makes it easier for them to meet their real-time fiscal obligations. This is especially relevant in light of the current pandemic where millennial workers, who in many instances, live on their own away from home, struggle financially with their once-a-month pay-checks,” he added.

But when Business Line reached out to millennials for their view, reactions differed. “If I get paid every week, I will tend to spend much more than I do now. And I definitely don’t want that. If a company is really keen to make the payment cycle more fluid for employees, it could try a fortnightly salary payment rather than a weekly one,” said Nishant Sinha, a young project manager at an IT MNC based in Gurgaon.

On the other hand, Sandeep Arora, Director, GreenTree Advisory Services Pvt Ltd, a Gurugram-based boutique search firm, which gives weekly and fortnightly payments to consultants for projects favoured this pay out mode. “This helps us in getting projects delivered in a timely manner. Also, this works as an added incentive to be able to get Gen Z and millennials on-board at a time when the gig economy is on the rise and they have multiple opportunities.”

Tax compliances

What about tax and other administrative headaches? With most companies automating payroll as well as compliances, this is not perceived to be a problem, though there could be more paperwork. G Sekar, Central Council Member, Institute of Chartered Accountants of India said that the law requires an employer to deduct TDS every time a payment is made to an employee towards salary advance, salary arrears or salary earned. So if salary is paid every week, the incidence of TDS will happen four times in a month. And the entire TDS collected in a month needs to be remitted to the government in the subsequent month within the specified date.