In the evolving landscape of employee benefits, understanding key financial terms and relevant jargon can help both HR professionals and their employees alike. Here’s a concise guide to some important terms used by Earned Wage Access providers to help you get started:

Earned Wage Access

Earned Wage Access (EWA), sometimes referred to as On-Demand Pay (ODP), is a financial service that allows employees to access a portion of their earned wages before their scheduled payday. It helps employees manage unexpected expenses by providing access to money they've already earned, enhancing financial flexibility and reducing reliance on high-cost credit options. To read a more in-depth guide to Earned Wage Access, see here.

Earned Wages

Earned wages are the amount of money that an employee has accrued for work completed but not yet paid out by their employer. The amount available to employees to be withdrawn with Earned Wage Access will be calculated as a proportion of their earned wages.

Automatic Reconciliation

Automatic reconciliation is a process that automatically updates and balances the amounts accessed by employees with payroll records, ensuring accurate wage deductions. This process simplifies the task for HR departments by seamlessly integrating with existing payroll systems and minimizing manual effort. It is only offered by two providers in the UK, Level being one of them. To read more about Automatic Reconciliation, check out this blog post.

Withdrawal

A withdrawal is the act of an employee accessing their earned wages through an Earned Wage Access service, typically available via a mobile app or web platform. A withdrawal is immediate; after the earned wages have been withdrawn via the service, the withdrawn wages will automatically be sent to the employee’s bank account and arrive within minutes. These withdrawals can provide immediate financial relief to employees, allowing them to address urgent financial needs without waiting for their scheduled payday.

Financial Wellbeing

Financial wellbeing is the overall health of an individual’s financial life, including their ability to manage day-to-day finances, withstand financial shocks, and plan for future financial goals. Earned Wage Access enhance employees' financial wellbeing by offering greater control over their earnings and reducing financial stress.

Conclusion

This glossary guide aims to empower HR professionals by providing clarity on key terms associated with Earned Wage Access services, thus enabling informed decision-making to support their workforce's financial health.

Speak to one of our On-Demand Pay specialists, and learn more about how it could work for your copmany.