Polarised opinions
The question of whether employers should offer employees access to wages as they earn them (commonly referred to as “earned wage access” or “pay on demand”) seems to polarise opinions.
Those in favour argue that allowing employees to access their wages once they have worked them reduces the financial stress and uncertainly caused by the wait for a month end pay cheque. They also say that with real time wage access, employees can manage their finances better to reduce debt, increase savings or to cover an unexpected bill.
These people also argue that from an employer’s perspective, reducing an employee’s financial stress and worry allows them to focus on their work and increase productivity. Remember, pay on demand schemes are typically very popular with employees, so this is a further benefit in attracting and retaining a workforce.
However, opponents of earned wage access argue that employers have a responsibility to protect those who may struggle to manage their finances. They suggest that allowing employees to access wages early could encourage impulsive spending, increasing the risk that individuals will be unable to cover major household bills, which are typically charged monthly.
Employers may be negatively impacted themselves by the associated cost of the technology required to manage real-time wage access. And with payroll professionals coping with an increase in the prevalence of cross-border remote working alongside compliance changes, they would have yet another challenge to overcome.
Only 5% allowing earned wage access
According to a 2022 survey of large American companies, only 5% offered earned wage access. However, the market has since grown significantly. Growth Market Reports valued the North American market at $2.1 billion in 2024, with Europe following at $1.4 billion. The European market is projected to expand at a compound annual growth rate (CAGR) of 18.7% between 2025 and 2033. It seems that ‘Pay on Demand’ is here to stay.
On the one hand, it seems fair to allow employees to access their money as soon as it is earned. On the other hand, it is reasonable to note that employers must ‘sell’ the worth of that labour to their customers and wait their turn to be paid.
Some employees may be prone to mismanage their finances, but if denied access to their earnings, may arguably turn to payday lenders or even loan sharks. Perhaps the real solution lies in an enlightened approach to employer and employee relationships, allowing businesses to identify and help vulnerable staff without denying the benefits of pay on demand to the majority.
What do you think? Is pay on demand a needless extra burden on payroll and cashflow, or an employee benefit worth offering? We would love to hear your thoughts!
To better understand how earned wage access fits into broader employer solutions and payroll compliance, explore our detailed Employer of Record page.
