In recent years, the way employees access their wages has evolved significantly. Amidst this transformation, Earned Wage Access (EWA) has emerged as a revolutionary financial tool. Let's explore what Earned Wage Access is, why it's gaining popularity, and how it impacts employers.

What is Earned Wage Access?

Earned Wage Access, also referred to as On-Demand Pay, allows employees to access a portion of their earned wages before their regular payday. Instead of waiting for the traditional pay cycle, workers can withdraw funds they have already earned, providing them with more immediate financial flexibility. This system typically operates through an app or platform, where employees can view and withdraw their earned wages.

Why is Demand for Earned Wage Access Growing Quickly?

Currently 15% of all UK employers offer On-Demand Pay, and this number is rapidly growing. In some industries this number is much higher, closer to around 30%. Several factors are driving the rapid adoption of Earned Wage Access:

Financial Flexibility

With almost everything available “on-demand” many employers are wondering why not pay too? Giving employees access to pay when they need it, they are no longer having to wait weeks for payday. This helps them manage unexpected expenses more effectively, ensuring maximum financial flexibility.

Avoiding Debt

Financial health is being appreciated as a new pillar of health along with physical and mental health. By accessing their wages early, employees can avoid high-interest loans or credit card debt, making Earned Wage Access a safer financial choice which should improve financial health.

Employee Satisfaction

Many workers appreciate the control and flexibility that Earned Wage Access provides, leading to higher job satisfaction and retention rates. In fact employers who use Level have seen a 50% reduction in staff turnover, and a 62% reduction in unfilled shifts. Read more about Level case studies here.

Will Introducing Earned Wage Access Give Me More Work?

Employers may worry about the administrative burden of implementing Earned Wage Access. However, most Earned Wage Access services are designed to integrate smoothly with existing payroll systems, minimising any additional work. In fact, many companies find that offering Earned Wage Access can reduce HR-related tasks, such as manual salary advance requests or handling employee loans.

Level is one of to providers in the UK who offer automatic reconciliation. This means that even on payday, you can run your payroll as normal without additional tasks of deducting withdrawals. Read more about this here.

Conclusion

Earned Wage Access is more than just a trend; it's becoming an essential aspect of modern employment. By understanding and possibly integrating Earned Wage Access, employers can not only enhance employee satisfaction but also promote a healthier financial culture within their organisations. They can do this without creating additional work for payroll – so it’s a win-win! Talk to our Earned Wage Access specialists today to learn how Earned Wage Access can benefit your company.