Earned Wage Access

The Intro Guide to Earned Wage Access in 2022

By

Ahmed El Sanhoury

-

April 7, 2022

There are many great benefits to Earned Wage Access, but what is it and how can it benefit your business and your employees?

Within Malaysia, millions of Malaysian employees live pay check to pay check? This sobering truth is sort of unsettling. 

But consistent with the newest figures by credible sources, Malaysians don’t have savings in the bank 

With this being the truth of numerous Malaysians, it begs the question: How can this pressing issue be resolved?

On-demand pay, also referred to as Earned Wage Access, has grown in demand and is fixing the outdated bi-weekly or monthly payroll cycles by giving people access to their earned wages once they need them. 

The financial pressures weighing on the shoulders of employees also can be detrimental to you as a business owner or management team. 

If you’re curious to find out more about how financial stress affects your employees and ultimately, your company, as well as how you can fix things , then read on, as we embark on a journey to understand what Earned Wage Access is, and how it can benefit your business.

What is Earned Wage Access

Bills still show up, right on time, monthly, without any consideration for special circumstances.

Earned Wage Access (or EWA) can sometimes be considered a financial wellness program that essentially allows employees access to their money as soon as they’ve earned it. 

It delivers an on-demand pay plan. This may give your employees peace of mind knowing their money is at their disposal whenever they need it most.

And especially in today’s post-COVID economy, having Earned Wage Access can really be a saving grace for workers.

They won’t be stressing out about pending bills while expecting payday to arrive with this employee wellness benefit in place.

How Does Earned Wage Access Work?

Earned Wage Access gives teams round-the-clock access to portions of their salary that have earned. It allows companies to offer employees instant access to their cash, helping them to avoid situations where they would need to resort to loansharks or overdrafting on their bank accounts and having to pay expensive fees. By offering EWA, employers are safeguarding their employees from cyclical debt cycles and providing a pathway to financial stability.

Payd believes that the best way to execute financial wellness programs like EWA is through API integration with payroll and HR management systems, which accurately calculates employees’ earnings automatically and shows available balance within the mobile app.

This also ensures that the employer can make all necessary payroll deductions before making the earned wages available which all accessed amounts are deducted as part of the payroll process. 

When choosing an EWA provider, you should avoid programs that deduct amounts directly from the employees’ personal bank accounts. These programs invariably cause employees to overdraft, which is the very thing that on-demand pay is trying to prevent.

This means that earned wage access essentially becomes a self-assisted program. Their money gets deposited once after the request is made, and employees have 24/7 access whenever they need it.

Benefits of Earned Wage Access for Your Business

As a business owner and employer, it’s easy to overlook the importance of supporting your workers. However, workers who aren't valued lose motivation and don’t feel respected.

This is often not a positive dynamic as employees are the lifeblood of your business. If they're not valued and appreciated, how long do you think your company will stay afloat?

Acknowledging this easy fact by supporting your workers is important . 

And implementing an employee financial wellness program like EWA is often one of the simplest ways in which you can show that support.

Here are a couple of ways Earned Wage Access can benefit your business:

Increased production and efficiency

Workers that feel heard, understood, and cared for are going to be far more productive during working hours. Earned Wage Access can make employees feel that you genuinely care about their financial wellbeing.

As a result of this, they're going to be more inclined to work harder, and make more of an effort due to an increased level of happiness. Happiness = more productivity.

Positive workplace environment 

Surveys and studies have confirmed that when workers are stressed about money which most Malaysians are, it spills over into their attitudes at work.

Financial worries of employees can be numerous, and these worries often rear their heads in interactions with colleagues, customers, and even with you as their employer.

By implementing an EWA solution, you'll ease tons of the financial stress that weighs on the minds of your employees.

Knowing they have access to some of their income if they need it eases tons of the strain many of your workers experience. This, in turn, makes for a far better, more cheerful, and positive work environment. 

Strengthened loyalty to the company 

When employees feel they're cared for by their employers, it bolsters their loyalty to the business. And a stronger sense of devotion will lead to lower turnover rates and better levels of output. 

Higher retention levels

With the job market becoming increasingly oversaturated, it's becoming harder to seek out and keep good quality employees. A great way to solve this is often to provide an employee financial wellness program. 

In this post-pandemic world, this is actually something many workers are trying to look for in their prospective companies. 

Here are a couple of more advantages your business could experience with EWA because it relates to employee retention.

Assists with enrollment – EWA may be a big incentive for several workers. By providing this benefit, you'll bolster your company’s ability to draw in other employees.

Bolsters reputation – Companies that display their dedication to the well-being of their employees via employee wellness benefits will without a doubt earn an approving rank among other workers (and businesses).

Lowers presenteeism and maximizes engagement – As workers become more on top of things with regards to their finances, they become less anxious about one among the most important aspects of any person’s life—money. This suggests you’ll have happier employees on your hands, which in fact entails that they’ll be less distant and doing more work.

Benefits of EWA for workers 

40% of Malaysian citizens can’t afford a RM 2,000 unexpected emergency. This vulnerability can be easily addressed by providing an honest employee wellness benefit program put in place for your workers.

Here are other benefits for workers being provided Earned Wage Access:

Prevents falling into debt traps

If your employees don’t have any emergency fund and live paycheck-to-paycheck, they become extremely susceptible to falling into the debt traps. This level of susceptibility may be a dangerous place to be in.

Falling into credit debt, borrowing from loan sharks, or getting coerced into taking out payday loans are common occurrences for people in such circumstances. Earned Wage Access can help prevent that.

Creates a financial safety net 

This employee financial wellness program can be a way to create financial security for workers. It can act as a security net for cover when needed.

Earned Wage Access can strengthen and reinforce the financial standing of workers. It also can instil financial confidence in employees, making them feel safer.

EWA offers a fresh start for those that are struggling. It is often a solid financial foundation that makes the conditions for them to create off of within the future.

The Future of monetary Wellness Benefits

In a post-pandemic world, the future of monetary wellness is bright. Having on-demand access to a daily portion of their earnings is among the things employees are in favour of and more organisations are recognising the importance of it with each passing day.

It’s totally plausible to ascertain Earned Wage Access will be commonplace in most—if not—all businesses within the next 5 to 10 years.

Is Earned Wage Access a good fit for your Business?

Earned Wage Access is an objectively beneficial program for businesses. Everywhere on the planet, companies are considering implementing such a program (or some variation of it) in their business.

From increased retention, recruitment, and engagement, to making financial stability within employees’ lives possible, EWA has numerous advantages that allow employees and employers to prosper.