Earned Wage Access in the UK
What is Earned Wage Access?
Earned Wage Access is a tool that lets employees access their income as they earn it, rather than having to wait until payday. This video explains it in more depth.
You can find an even quicker summary here, in less than 500 words.
How does Earned Wage Access work?
Employees
After completing a working day or a shift, the money earned for doing so is added to an employee’s balance in their Earned Wage Access app. They can withdraw some of this whenever they want and it will instantly appear in their bank account. On payday, they will receive their pay minus any money that they took ‘early’.
Employers
The two most advanced providers, specifically Wagestream and Level, can enable this without any manual deductions work being required from payroll. Their software will calculate the right amount to pay each employee on payday and automatical make these deductions.
Most UK earned wage access providers will fund any income taken before payday, meaning there is no need impact on the employer's cashflow.
Other names for Earned Wage Access?
There are a few different names for Earned Wage Access. They all refer to exactly the same thing. The most popular are:
On-Demand Pay
Instant Pay
Stream Pay
Flexiable Pay
Automated Wage Advance
Employer Salary Advance Scheme
Early Wage Access
How does Earned Wage Access work?
If Steve gets paid £100 a shift and has worked 5 shifts since his last payday, he has earned £500 in gross earnings. Usually, he wouldn’t be able to access this until payday, which could still be many weeks away.
Earned Wage Access would allow him to withdraw a portion of this immediately. If, for example, his employer had set the cap to 50% of gross earnings, Steve could access up to £250 on this day of the month.
Read our Frequently Asked Questions and Answers here.
Who uses Earned Wage Access?
15% of UK employers now offer Earned Wage Access as an employee benefit. This includes private sector employers like Tesco and Capita, as well as public sector employers like the NHS.
The History of Earned Wage Access
Earned Wage Access was created in America to combat rising payday loan use and to help traditional employers match the pay cycles of gig companies like Uber.
EWA is now used by over 20% of all American workers; a figure that rises to almost 100% in industries like retail and hospitality. Notable users include McDonalds, Walmart and Subway.
Benefits of Earned Wage Access
Employees
Avoid Debt: Without adequate savings, many people turn to debt when unexpected costs arise. EWA is significantly more affordable than credit, approximately 99% cheaper than a payday loan, and is totally debt-free.
Easier Budgeting: Many workers find it easier to budget over shorter time periods and withdraw money as direct debits come out, rather than managing a single pot of money across a whole month.
Available to Everyone: Unlike most financial products, EWA is available to all employees for the same cost; regardless of their credit history or relationship with their line manager.
Employers
Reduce Staff Turnover: Employees are less likely to change jobs and will be reluctant to move into roles where they cannot be paid on demand. Some employers have reported reductions in staff turnover as high as 50%.
Recruit Staff More Quickly: If a candidate has a choice between two very similar jobs, but one offers EWA, they are likely to choose this over one that does not.
Fill Shift Rotas: Staff are far more motivated to work overtime and extra shifts when they get paid for them sooner. Some employers have reported more than 60% increase in shift-filling even when paying the same hourly rate.
Reduce Absenteeism: Studies have shown that earned wage access reduces absenteeism by an average of 13%, as workers are less stressed about their finances and reminded more frequently of the financial reward for their work.
Watch this video for a great summary of the benefits of earned wage access (EWA).
Is it a payday loan?
No. Access to earned wages is entirely debt-free for employees. It is their hard-earned money, they just get access to it sooner.
What is the Earned Wage Access Business Model?
So, how does Earned Wage Access make money?
Employers
Some providers charge an annual fee to employers
Employees
All providers charge a flat fee to employees to access their income before payday. This is usually between £1.75 and £2
UK Earned Wage Access Providers
Level: Provider to Capita, the NHS and the UK’s largest homecare provider, Level is one of the founding members of the On-Demand Pay code of conduct. The company prides itself on being the most technologically advanced and having the best service.
Wagestream: Wagestream is the choice of many big, high-street names due to its partnership with Fourth. Wagestream is the obvious choice for employers already using Fourth.
Access Group: Provides the service to the many current users of its payroll and workforce management software.
Ceridian: Provides the service to current users of its payroll and workforce management software.
You can see the full list of trusted providers who have signed up for the Code of Practice on the Chartered Institute for Payroll Professionals (CIPP) website here.
Understand how Level's On-Demand Pay works, for both the employer and the employee.