At a recent CIPP roundtable on the future of payroll, we discussed earned wage access (EWA). And it immediately became apparent to me there’s a lack of awareness about it among the payroll community.
I think it’s important as many payroll professionals as possible know about earned wage access, as it’s a huge benefit to employees. So I wrote this blog post to help spread the word: here’s what you need to know about EWA.
What is earned wage access?
Earned wage access is a financial service that allows employees to access a portion of their earned pay before their regular payday. So instead of waiting for a biweekly, lunar or monthly wage payment, employees can get paid for the hours they've already worked in real-time or on-demand. This service is usually offered through third-party or payroll software providers.
What do you need to know about earned wage access?
- Employees can access their wages as they earn them, which can help them out with immediate financial needs
- Earned wage access isn’t considered a loan – so there aren’t interest rates or an impact on credit scores
- Some EWA services charge employees minimal transaction fees. Others are free. It all depends on the employer's arrangement with the provider whether or not the employer takes on any transaction fees
- Earned wage access programmes can often integrate with payroll software – including ours. So early withdrawals are automatically deducted from the next wage payment – easy!
- EWA helps employees avoid high-cost alternatives, like payday loans, unauthorised overdrafts or credit card debt, for unexpected expenses.
- Earned wage access services were historically used in industries where workers more often face cash flow issues and need immediate access to funds – such as retail, hospitality, care and gig work. But with the cost of living crisis in full swing, EWA is becoming more popular in many other industries
Why should business leaders consider introducing earned wage access to their employees?
There are lots of benefits to introducing earned wage access – both when it comes to employee wellbeing and organisational success.
1. Improved employee financial wellness
- Reduced financial stress – EWAs let employees access their wages before payday. This can help them manage unexpected expenses, avoid high-interest payday loans or reduce credit card debt
- Increased savings – with real-time access to wages, employees can better manage their cash flow and reduce their reliance on costly financial alternatives. Which can lead to increased savings
2. Increased employee productivity
- Less distraction at work – financial stress can put a major strain on an employee’s focus and engagement. Earned wage access can get rid of some immediate financial concerns, which, hopefully, means improved mental wellbeing and higher productivity
- Lower absenteeism – employees who face financial issues are more likely to take time off to handle personal matters. EWA helps reduce this by allowing them to take control of their finances proactively
3. Attraction and retention of talent
- Competitive advantage – offering earned wage access is a valuable perk that attracts top talent in a competitive job market. Especially younger workers or those who need a bit more financial flexibility
- Increased employee retention – financial wellness benefits like earned wage access show that employers really care about their employees’ wellbeing, which can lead to higher job satisfaction and reduced turnover rates
4. Cost reduction
- Lower turnover costs – reduced turnover means less need for recruitment, training and onboarding new employees, which will save organisations money
- Fewer payroll advances – EWA can reduce the need for companies to offer payroll advances or short-term loans to employees, which simplifies admin work and sidesteps cash flow issues
5. Enhanced company culture
- Improved employee morale – giving employees control over when they access their earnings fosters a sense of trust and empowerment, improving overall morale
- Promoting financial literacy – some EWA platforms come with educational tools that promote better money management and budgeting skills
6. Alignment with a flexible workforce
- Adapting to gig and flexible work models – more and more employees are in the market for gig work or flexible employment arrangements. Offering earned wage access aligns with the desire for real-time compensation, making it an attractive feature for modern workers
By introducing earned wage access, business leaders can create a more supportive and productive workplace. Win. All while improving employee satisfaction and reducing costs associated with turnover and financial stress. Double win!
If you’re anything like me, you’re an advocate of helping the UK workforce reduce financial stress. So why not consider EWA for your organisation and make a positive difference in your employees’ lives?
From facilitating earned wage access to AI, our payroll solutions are here to help payroll pros like you. Download our brochure or request a demo to learn more.