Why we pay our employees £1

A few years ago, we had a new employee start. Their name shall be “anonymous”.

Now I can only imagine it was a bit of first day nerves, but they managed to write down their bank account incorrectly AND the sort code.

I’m pretty sure you can imagine where this is going - yes, they didn’t receive their first salary payment. I was confused and I would guess they were a bit concerned.

Now the crazy thing was, we used to make test payments to new employees. For some reason, it didn’t happen on this occasion, which was naturally the occasion on which it really mattered.

Leaving someone out of pocket for a month wasn’t really something I could live with, albeit a bit of Googling around while writing this article suggests legally, I could. Or, I could have given them a loan. Also not very nice I felt.

So I made the correct payment and set about recovering the incorrectly paid salary, figuring it couldn’t possibly be that hard (provided someone hadn’t actually received it and done a runner with the money).

Having contacted our bank, as expected, we had to complete some forms. The slight shock was the timescale - up to three months for the investigation to take place and the funds to “possibly” be returned.

Fortunately the account number at the other bank’s sort code didn’t exist, so the funds had been dropped into a suspense account and were still sitting there. It did take almost three months to get the money back.

Exmos’ Observations

Don’t drop good processes

When you have a good process, stick to it. We’ve long since reinstated this as part of our employee on-boarding and we now send everyone £1 in advance of their first salary. Sometimes we do it with suppliers too if the amounts are going to be large. There’s something reassuring for both employer and new employee seeing that first payment arrive.

Not just for business

I also encourage people to do this when they are paying people via their mobile banking apps.

Getting incorrect payments back is hard

If you have a bit of a Google, the results would suggest that it can be a real hit-miss as to whether the outcome will be a happy one.

Things are improving

There now seems to be a new code of conduct which is voluntary and faster. Most of the major UK banks seem to have signed up for it, although it’s not clear if it covers business transactions or just personal ones. If your incorrect payment does however hit a real account and that person withdraws the funds, it can be very difficult to get them back.

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