If you’re looking for workable solutions to boost financial wellness in your employees, then earned wage access (EWA) could be the answer. Yet despite its soaring popularity, many employers are still asking, what is earned wage access and does it pay? Let’s find out.
Let’s break down what earned wage access is. Earned wage access gives employees access to the money they’ve already earned, but haven’t yet been paid. It essentially means they don’t have to wait for a rigid pay date.
You may have heard it referred to as on-demand pay, salary advance, or flexible pay. Regardless of the name, it’s fast becoming the new must-have employee benefit. Here at Openwage, we call it on-demand pay.
With 94% of UK employees plagued by money worries while at work, earned wage access in the UK is gaining in popularity. The reasons are two-fold;
There’s an appetite from employees to have flexibility with their pay. 80% of individuals surveyed by Ernst Young indicated they would use a form of on-demand pay (Ernst Young, On-demand Pay: Payroll that works for all).
We have so many on-demand services these days, so why not earnings?
There’s growing interest among organisations to bolster their existing wellness programmes with a financial element. That’s because there’s clear evidence that financial wellness affects business outcomes.
A research report commissioned by HM Treasury and the Financial Conduct Authority showed that 90% of employers agreed that financial concerns impact workplace performance.
On-demand pay from Openwage doesn’t cost you anything as an organisation. This makes it a highly accessible route to providing a financial wellbeing benefit to employees.
There are no fees for rolling out the service to employees. Importantly, Openwage provides the funds for pay advances, so there’s no impact on the organisation’s cash flow.
There is a low, transparent fee charged to the employee each time they access their earnings. But with fees as low as £1 per transfer, on-demand pay from Openwage offers a safe, viable alternative to predatory high street loan providers.
Since there are several earned wage access providers out there, the specifics of each service can vary.
Employees can access up to 50% of their (gross) earned pay. Employers can choose to lower this percentage if they wish.
There’s no impact on the company payroll. On-demand pay doesn’t replace your existing payroll processes. Employees will still receive their salary on their normal payday, minus any earnings already transferred during the month.
Answering the question, what is earned wage access wouldn’t be complete without looking at how it benefits employers. Below we outline four ways it pays to adopt on-demand pay as part of your employee benefits and rewards package.
Financial stress is when someone feels anxious or stressed about their financial situation. Employees who are in a state of stress may not be able to forget about these anxieties when they’re at work. According to research by YouGov and Yulife, 80% of UK workers admit that financial stress negatively affects their performance at work.
A report by Willis Tower Watson found that highly stressed employees took 1.75 absence days to every one day taken by low-stress employees.
Giving employees the freedom to pay themselves when they need to can promote financial wellbeing. In a recent research study, 63% of workers who don’t currently have access to on-demand pay indicated that they would feel less stressed financially if given access to it.
On-demand pay can reduce the financial stress that employees are experiencing. This, in turn, can have a positive effect on employee performance and reduce absenteeism.
When we’re stressed because of money issues, it’s distracting and can negatively affect our mood. As a result, productivity levels in employees experiencing financial stress can decrease.
Research by the University of Warwick shows that happier people are 13% more productive. Happy employees typically equate to higher levels of productivity, helping your business to thrive.
Research by Deloitte shows that what really matters to Gen Z and millennials is working for forward-thinking, ethical companies who care about employee wellbeing.
These generations are the workforce of the future and adopting a financial wellness program is one way employers can show they care. This can have a positive impact on your company’s reputation and your employer brand.
The perks and benefits that a company offers are important to candidates. 3-in-4 workers (78%) say access to on-demand pay would affect their decision to choose an employer. Adding earned wage access to your list of benefits on job adverts is a great way to ensure candidates know what they stand to gain.
EWA can also encourage employees to stay at your company. More than 8-in-10 workers (82%) would be less likely to look for a new job if their current employer began offering more financial wellness tools, including on-demand pay. With the cost of recruitment so high, it makes sense to invest in perks that can boost your retention rates.
Now you know what earned wage access is, let’s outline three ways it benefits employees:
As the cost-of-living crisis deepens, many individuals are being driven to borrow at high rates of interest to cover essentials and unexpected bills. For example, payday loans are still hugely popular. This is mainly because they’re a fast way to get cash. The trouble is, the interest rates and fees are extortionate.
Instead of resorting to payday loans with high interest rates, workers can draw on salary that they’ve already earned through EWA. Access to earnings gives employees a safer and more cost-effective alternative to payday loans.
There are no repayments because they’re not borrowing money. They’re simply gaining access to their earnings sooner.
Financial stress is a big contributor to mental health and wellbeing. Putting workers in control of their financial lives, including how and when they get paid, significantly reduces anxiety.
Nobody likes to have their money tied up. With EWA, employees can access their earnings if a financial situation arises. But there’s no obligation or cost if employees don’t use it. Many employees simply enjoy the feeling of knowing they can access their earnings if they need it.
EWA isn’t a loan, so it doesn’t affect an individual’s credit score. There are no credit checks to set up an Openwage account, and no credit checks to draw down earnings.
Importantly, using on-demand pay won’t show up on an individual’s credit file, so it won’t affect their ability to access financial products in the future.
Some of the biggest names in healthcare and hospitality are already offering EWA. Companies like Bupa, Virgin Care, and Adecco Group are enjoying the benefits of offering it as part of a comprehensive financial wellbeing policy to build financial resilience.
Openwage is on a mission to revitalise the financial health of working people and make access to earnings as fair as possible. We also pride ourselves on being the most ethical, responsible, earned wage access provider around.
If you’d like to find out how we can help you improve the financial health of your employees, then please get in touch today or request a demo.