Earned Wage Access could calm money worries, CIPP says

EWA is a payroll scheme that allows employees to access their wages as soon as they earn them.

The CIPP’s research found that 90% of UK employees who choose to be paid more frequently with EWA say their finances are stable or improved.

Read more: Half of employees have missed a bill payment due to inaccurate payroll

Over 4 million UK workers are now being paid using EWA, according to the CIPP, with one in 10 companies offering the option.

Hatty Tagart, researcher at financial benefits and EWA provider Wagestream, said EWA is particularly helpful for workers with variable shift patterns.

She told HR magazine: “The first step to understanding EWA is to stop thinking like a high-income, salaried worker. It's not for you. It's primarily for those on shift-based or variable income, because a long, fixed pay cycle with no visibility of your pay throughout the month actively reduces your quality of life. 

“That's why government bodies typically signpost it as a budgeting tool, and employers typically offering it are those with a large frontline workforce."

The research also found 43% of workers spend three or more hours a week thinking about or dealing with financial stress.

In February 2021, the outgoing Financial Conduct Authority chief, Christopher Woolard, published a review of the unsecured credit market in which he recommended that EWA providers establish a voluntary code of conduct.

In response to these concerns, the CIPP created an EWA code of practice together with UK EWA providers including the Access Group, AnyDay, Ceridian, Hastee, Level Financial Technology, Salary Finance and Wagestream.

The code includes making sure that customers fully understand how the product works and how it can help their finances.

Although best practice is vital, employers should allow employees to use their personal judgement when using EWA, according to Tagart.

She said: "It is patronising and harmful to approach flexible pay as needing heavy-handed, paternal 'checks and balances' or 'employer-set limits'. Employers offering a flexible pay cycle should allow workers to set their own personal rules and limits, rather than dictate to them how to manage their own money. 

“This not only encourages people to take charge of their own money management, but avoids unintentionally compounding a culture of money stigma. People should never feel ashamed of getting paid with their own money."

Read more: Do more to support employee financial wellbeing

The code of practice asks providers to:

1. Design EWA products and services that meet the needs of employees and provide fair value to consumers.
2. Communicate with consumers in a way that is clear, fair, and not misleading, allowing consumers to make informed decisions.
3. Deliver good outcomes and consistently fair treatment to vulnerable consumers in relation to the EWA products.
4. Support consumers to realise the benefits of EWA products and services in pursuit of their financial objectives.
5. Manage EWA products and identify where products no longer provide fair value or meet consumer needs.
6. Monitor the outcomes that they are delivering to consumers through appropriate management information.
7. Maintain appropriate consumer relationships and avoid conflicts of interest which lead to consumer harm.
8. Train staff to provide suitable service and support to consumers. Staff will feel comfortable in the roles they take on.
9. Commit to annually assuring that they meet the measures outlined within the Code and deliver good outcomes for consumers.