Financial pressures are a constant concern for many Canadians. Many find themselves living paycheque to paycheque, and it’s impacting their quality of life. The Financial Consumer Agency of Canada found that 1 in 3 Canadians is out of cash by the end of the month. The FP Canada™ 2025 Financial Stress Index showed that almost half of Canadians have lost sleep because of financial stress. Earned Wage Access (EWA) is a new way tech and payroll have come together to help relieve some of this stress.
What is Earned Wage Access?
Earned Wage Access allows employees to access a portion of their earned wages before their next scheduled payday. It’s not a loan or cash advance. It’s simply early access to money they’ve already earned but haven’t yet been paid for. This gives them access to money without the need to take on debt, pay out interest, or even undergo a credit check.
How does EWA work
EWA is only available to those who work for companies that have paired up with an EWA service provider. These providers integrate their tech with the employer’s payroll system to track earned wages in real-time. When employees are running short on cash, they can request a portion of their earned wages, typically up to 50% via the provider’s app. The funds are automatically transferred to their bank account. The same amount is then deducted from their next paycheque.
Benefits for Canadian employees
EWA offers a multitude of advantages for workers that are especially relevant in Canada, where a significant portion of us are struggling financially.
Financial stability and flexibility
EWA empowers employees with greater control over their pay, helping them manage unexpected expenses like medical bills or car repairs without waiting for payday. This immediate access can prevent late fees and penalties. A particularly important benefit considering that a recent survey found that half of Canadians are using all their income and are quarter are taking on debt just to meet basic needs.
Avoidance of predatory lending
Employees struggling to get by or faced with an unexpected expense often turn to predatory lenders. With interest rates well into triple digits, these organizations that offer payday loans and buy now pay later services have proven to be the catalyst for steep debt cycles. EWA serves as a way more cost-effective alternative to get out of a financial jam.
Improved health and financial wellness
By reducing financial stress, EWA contributes to overall employee well-being. It can help foster better financial habits and support savings goals by allowing employees to manage money on their own terms. Statistics Canada reports that financial stress can cause significant health problems such as heart disease, high blood pressure, and mental health issues. By offering a solution to financial stress, EWA also contributes to better overall health.
Transparency
EWA programs often provide real-time tracking of earnings, giving employees clear visibility into how much money they have available.
Support for new employees
New hires can access their earned funds without waiting for the full pay cycle, which is particularly beneficial for those who haven’t had a job recently.
Strategic Advantages for Canadian Employers
For businesses, offering EWA is not just a compassionate gesture; it’s a strategic move with measurable benefits. Companies across various industries, including healthcare, retail, manufacturing, and hospitality, are adopting EWA to support their workforce:
Enhanced recruitment and retention
EWA is a valuable recruitment and retention tool, attracting new talent and significantly reducing employee turnover. Leading payroll and HR company, ADP, released findings saying that 93% of respondents agreed that EWA helped with talent attraction. The same study revealed that 96% agreed it helped with employee retention.
Increased productivity and engagement
Financially stressed employees are less engaged and productive. By alleviating financial worries, EWA can lead to a happier, more motivated, and more productive workforce. The Financial Consumer Agency of Canada says that financially stressed employees are “5 times more likely to be distracted at work and close to half spend 3 hours or more a week dealing with financial issues.” They say that this translates to companies losing an average of $1000 a year per financially stressed employee.
Cost Savings
There are even more cost savings than just that of an engaged and productive workforce. Experts say that each position turnover costs, on average, 20% of the person’s salary. Meaning that higher employee retention translates directly into reduced costs associated with back-filling positions, recruitment, and training.
Competitive Advantage
Offering EWA enhances an employer’s brand reputation and positions them favorably in the modern labour market. It signals a commitment to employee financial wellness.
Downsides
The benefits to EWA are clear, but it’s also important to know about a couple of downsides. Firstly, using EWA often means incurring a fee. That being said, they are much cheaper than alternatives. Most of the time, the cost is no more than a typical ATM fee a bank charges. Secondly, some critics raise concerns that employees will rely on EWA instead of implementing good money habits that mean long-term change. To mitigate these concerns, most EWA providers have instituted caps and guardrails to promote healthy usage.
EWA in the Canadian landscape and regulatory considerations
As great as it is that EWA is rapidly growing in popularity in Canada, it brings with it some regulatory and security concerns. It’s imperative that providers operate in a transparent and ethical way. That’s why they follow established financial regulations, including:
- PIPEDA compliance for data protection
- Provincial employment standards
- Financial Consumer Agency of Canada (FCAC) guidelines
- Anti-money laundering (AML) regulations
Following these guidelines and standards makes EWA a safe and easy way to bridge the paycheque gap.
Wrap up
Ultimately, EWA is proving to be a revolutionary solution that offers a powerful mechanism for Canadians to improve both their financial and overall health and foster a more engaged and productive workforce.
Relying on EWA to stay ahead of your bills? Want to get ahead even quicker? Contact one of our Credit Counsellors for a free, no-obligation consultation. They’ll talk through your financial picture with you and then go through the debt relief options available to help.
