Over the last few years, companies have had to take a long hard look at the way they operate internally, with a focus on practices that brand them as most attractive to potential hires. More than compensation and traditional benefits, in recent times, employees also look for employers offering more flexibility to access wages beyond their fixed payday: a practice referred to as early wage access (EWA), earned wage access, on-demand pay, instant pay or earned income access.
Why employees are attracted to EWA
Let’s consider the relationship between financial wellbeing and the workplace. Imagine your employees anxious about bills that need to be paid and feeling the weight of their financial burdens… This stress and anxiety can impact their overall wellbeing and productivity - leading to further physical, as well as mental health issues and dwindling workplace performance. And they may start equating this with your company being an unhealthy and unhappy work environment…
An employer that cares
The impact to your employer brand and annual turnover could be detrimental, considering this could sway how current employees and future job applicants perceive working for your company. These days, candidates actively seek out employers that have their best interests at heart, offering solutions such as the much-desired access to wages they’ve already earned, without having to wait for their official pay date. Worth considering to reinforce your brand as an employer that nurtures and cares for their workers, and to separate your company from competitors, attracting the right talent to help scale your business.
How does EWA work?
Timely access to earned wages helps employees tackle their day-to-day cashflow issues without resorting to high-interest overdrafts, credit cards or loans. Companies predominantly offer the solution via two models: one is a “pay advance” option employees can utilise directly with a financial provider to receive an advance on their anticipated wages. The other model is employer-based, i.e., the company contracts with a provider to offer the solution to employees via a digital app. Some platforms front the cash to employees with minimal interest, and at little to no cost to employers, reducing the impact on company expenses.
A win-win for both businesses and employees
Many workers struggle to cover their expenses between paychecks. Instead of turning to payday lenders, early wage access lets employees access their money when they need it most. In the process, companies build employee morale, increase productivity and engagement, and maintain a culture of empathy wherein employees thrive both personally and professionally
If used correctly, earned wage access can help employees better align their incoming funds with outgoing expenses and provide stability to their cash flow. Employers, on the other hand, can also create stronger bonds by empowering their workers with this business solution, leading to improved staff retention and reduced HR costs.
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