Splitting Accounts and Earned Wage Access

This blog post has been written to help you understand one of the most important aspects of Earned Wage Access - how splitting accounts enables Earned Wage Access without payroll having to make manual deductions.

What is Earned Wage Access

First thought, a quick recap. What is earned wage access?

Earned wage access, also known as early wage access or On-Demand Pay, is a service that allows employees to access the money they've earned before the typical payday. With earned wage access solutions, employees have the power to request a portion of their accrued wages whenever they need it. This is a paradigm shift from the conventional bi-weekly or monthly paycheck, reducing financial stress and providing a buffer against unexpected expenses.

Manual vs Automatic Earned Wage Access

Many earned wage access provides require payroll to make manual deductions for all employees who have taken some of their pay before payday. However if, for example, a third of all employees use the service in one month, this would create far too much manual work for your payroll team to cope with. Splitting accounts solve this.

Automatic Earned Wage Access

This unique technology means that you continue to run payroll exactly as you do now.

 When an employee signs up to use earned wage access, Level automatically sets up a splitting account for each user. When payroll is run, their income enters this account and, in a matter of seconds, any income advanced before payday is automatically recouped, and the rest is forwarded straight onto their personal bank account. Importantly, every splitting account is legally owned by you, the employer. Level just has a limited mandate to control them on your behalf.  In practice, it works like this: 

If an employee withdraws £40 of their earned income in the middle of the pay cycle, Level transfers this amount to their bank account. Nothing is required from the employer and Level funds this. On payday, you would simply run payroll as normal, but the employee’s earnings pass through their splitting account afterwards. This automatically sends the £40 they’ve already withdrawn back to Level in a few seconds, before forwarding the remainder of their salary to their personal bank account. 

And it really is that simple. Enabling earned wage access for your staff, without any big changes for your payroll team. 

Who offers automatic earned wage access?

The only earned wage access providers who offer automatic earned wage access in the UK are Level and Wagestream.