Why Earned Wage Access is the Future of Payroll

As we offer a workforce management solution purpose-built for Australian businesses, we are regularly exposed to unique opportunities that continue to add value to all of our users. Earned wage access is just one example that creates a significant impact and value for employers and employees alike.

Read on to discover foundU's earned wage access feature, the benefits it is offering Australian businesses and why professionals are calling it "the future of payroll".

What is earned wage access?

Earned wage access is exactly how it sounds - a way for employees to access the wages they have earned when they choose, even before a scheduled pay day.

At foundU, we can offer earned wage access thanks to our native payroll and the comprehensive data captured and stored in our platform. When offering earned wage access, your employee’s eligible wage is calculated after you have approved their worked shifts. This means that, unlike other solutions, employees can only withdraw the money that they have earned and that’s been approved.

How does earned wage access work?

To provide accurate calculations of earned wages, you need access to a few key data points. As Australia's only true all-in-one workforce management software, the foundU platform stores all this data:

• an employee’s pay rate (inclusive of any award rules)
• hours an employee has worked
• approval from employer of hours worked
• employee specific set-ups, including tax file number thresholds, scheduled deductions and salary sacrifice arrangements

With this data all in the platform, the process for earned wage access is simple:

1. Employee works: An employee works a shift that they have been scheduled for.
2. Shift approval: The employee's worked shift is approved by management, or auto-approved using the foundU Clock app.
3. Pay available: The shift net earnings are calculated and become available in the employee's foundU profile.
4. Pay withdrawn: An employee can access their net earned amount before pay day for a flat fee of $5 per withdrawal.
5. Pay deducted: If an employee withdraws money, a deduction is created. foundU automatically recoups that money when you pay your employee through the foundU platform on your normal pay day.

In determining an employee's net earnings, the foundU payroll calculator correctly takes into account all required variables - ensuring employees can never take more than their normal net pay would be on their usual pay day.

Why does foundU offer earned wage access?

By adding value to our customers, we are able to further our mission: to empower customers to manage their complex workforces with accuracy, efficiency and confidence.

foundU Director and Head of Strategy Tyson Armitage says the feature was born from a desire to help businesses navigate challenging economic waters and support employees looking for a better way to manage their finances.

"Australia's talent shortage has forced employers to look for ways to better attract, retain and manage their employees - something that foundU is uniquely positioned to assist with," he said. 

"At foundU, we're always looking for ways to add value to our clients in any way, shape or form - whether that's a product that we can offer them directly, or something they can offer their employees.

"On the flip side, 65% of employees paid through the foundU platform are done so on a casual basis, which means greater uncertainty over how much they get paid each week.

"To mitigate this, they can access external financial products, but these usually come with great risk. Our solution is designed to make it easier for employees to access their earned wages without having to worry about getting into a debt trap, or without it being a loan or affecting their credit score.

"Companies want to offer earned wage access as a fallback for their people. It's not for everyday use, and our customer insights show the value it brings. User behaviour highlights that people see value in having it there as a fallback or 'just in case', and to the employee, there is no cost to signing up for the reassurance."

What are the benefits of earned wage access?

While plenty can be said about the benefits of earned wage access for employees, there are a range of benefits for employers using the foundU platform.

• No extra steps or additional setup costs: Let us know that you would like earned wage access available for your employees and we'll switch it on for you - it's that easy.
• Differentiation in the war for talent: Give talent another reason to join your workplace and differentiate yourself against other employers in your industry.
• Reduced staff turnover: Enhance employee financial well-being and proactively support employees experiencing financial difficulties.
• Based on real payroll data: Use real data to calculate an employee’s available pay based on actual workdays or shifts completed and approved.
• Funds accessible within 15 seconds: Enable your employees to withdraw their pay within 15 seconds – no admin required and all paid to the correct award.

However, Tyson believes earned wage access is a huge value-add for employers looking to improve employee attraction and retention.

"I think the biggest value-add is that employees will feel like a priority to those employers, that they're allowing them to have greater control over their finances," he said.

"Whether or not they use this feature, it's still there as a support and backup option. And through offering it, I believe employers will see better staff attraction and retention rates, which in turn creates a better culture of happy employees, which is crucial for survival."

But don't just take our word for it...

Omni Recruit

A big believer in employee financial well-being, Darren Winmill, the founder and director of Omni Recruit, often gave wage advances for new candidates or those who were experiencing financial stress. Introducing foundU and the ability to offer earned wage access has taken the risk and the headaches away from their business.

“The earned wage access feature is cost effective, and there is no impact on us,” Darren said.

“With employees themselves able to log in and draw down on their own wages, there’s no back-end administration or even liability risks for us or our clients. It’s also almost safer for the staff because it’s an internal system. They don’t have the risk of giving their bank details to an external company, it’s all within the one system.”

National Protective Services

Mandeep Singh, General Manager at National Protective Services, also appreciates foundU's earned wage access feature and is happy for their workforce to be able to manage their own finances, especially in the current economic environment.

"Many of our guards know and use the earned wage access feature to draw down on their wages before payday - we have about 10% of every pay withdrawn in advance," Mandeep said.

"Giving staff the ability to manage their own finances is the future of payroll, and I think, one of the great features of foundU."

Australian Workforce

Danny Sena, Chief Executive Officer at Australian Workforce, believes that earned wage access offers a lot of value for workers who are limited by a typical pay run and need access to their money sooner.

"We pay workers fortnightly, which causes some to be reluctant to take on jobs," Danny said.

"In these occasions, we let the worker know that they can actually draw down on their wages after the customer has approved the hours and it will only cost them $5.00. Most workers are happy to continue with the job since now they can access the money weekly.

"It's a good service at an affordable price, and is much safer than other pay day options out there."

Earned wage access is just the beginning

These are just some of the early adopters of earned wage access who are already reaping the benefits. 

If you want to offer early access to earned wages to employees, in a responsible way, get in touch with foundU today.

Want to know more? Book a Demo.