JOHN GLOVER: Hello and welcome to another Pendragon Straight Talk. This week’s question is quite an interesting one for me as its linked to the ‘New World of Work’ book that I released just before Christmas, and the question is how will people be employed in the future?
Initially, I don’t see any difference in theory between a PAYG person or a traditional employee versus a contractor. I believe in the future everybody will be employed in the same way under a contract of employment, stating what you are doing, for what return. However, how you get remunerated for that will change. These contacts can include holidays, sick leave or not depending on the agreement, but they will not have to be paid directing by the employing entity.
I believe people will want more control over their finance and income and use a salary management or outsource company to collect their funds whether they are contractors or employees, allowing them to maximise their net income, a bit like salary packaging on steroids.
We’re starting to call this play packets not pay packets.
With the technology that’s here already, and coming, and the fact that the banks have got to provide instant pay by the end of the year, this means that people could be employed by one entity, but paid by another quite quickly, especially if that entity specialises in salary management.
They will look at their individual pays on a pay by pay basis and maximise their net take home pay.
The mindset at the moment is, that if you are employed, you are paid by employing entity. Sometimes the pay roll service is outsourced, but the result is the same, you are paid on regular basis, a regular amount. I believe, and actually know because we are doing some of this already, that you can be paid as an employee, receive your gross income on a regular basis, but your entity sends your gross amount to a salary management company that then look at maximising your net take home pay, every pay, through adjustable salary packaging.
This means some months you will have more net income than others, which is good, and with this extra money you may choose to spend it at the shops, or on the kids, or maybe on yourself, or you might want to talk to a financial advisor or someone who can lend you some money, to make more money out of that extra money.
So, I believe, everyone is under a contract of work and that contract stipulates how much, what it’s for and what it includes, holidays, sick leave, redundancy et cetera. But you can choose to be paid through a third party who will advise you on the best way to maximise the net take home and then have qualified professionals around you to help advise how to best maximise the net extra money that you have got, the income that you are going to get through this, we’re calling the ‘New World of Work’ service.
By the way, this can be done on a global scale. You could work anywhere in the world, but be paid and managed somewhere else, as long as all the tax laws are abided by then no one will have an issue.
Interesting times ahead and it’s not far off, as I said, we’re already doing this for some of our clients.
Thanks of listening, I look forward to talking to you next week.
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