This podcast captures the views of some financial services industry commentators on the merits and drawbacks of ESAS (Employee Salary Advance Schemes).
Guests on this podcast are:
How a Employee Salary Advance Scheme works:
Specialist scheme operators, which are usually unregulated businesses, often provide the product as part of a 'wellbeing package' to help employees with financial management. Some offer employees an app based platform which sits between the employer’s payroll operations and the employee’s bank account. The employee can then a draw down usually up to half of their accrued or earned wages before their next pay day. The scheme operators usually charge the employee a fee for each drawdown. The employer will then pay the balance of the salary (i.e. net of the advanced payments and the fees for the service) on the next payday. Employees can make multiple drawdowns during each pay cycle and can repeat this again in subsequent periods.
For many employees who do not have major debt problems, an ESAS (Employee Salary Advance Scheme) may be helpful where for a variety of reasons they need to quickly access some of their salary early.
However, for employees with limited options, there are potential risks. Set out below are ways in which employers and scheme operators could mitigate some of these risks.
The FSA says: The risks for employees and employers are:
While the product has benefits, it is important that employees and employers are aware that there may be some risks in using these schemes.
Talking Credit Unions with Chris Smith is a regular podcast dedicated to informing credit union practitioners, leaders and opinion formers on variety of industry topics. To contact Chris Smith, smithowls@gmail.com
This podcast captures the views of some financial services industry commentators on the merits and drawbacks of ESAS (Employee Salary Advance Schemes).
Guests on this podcast are:
How a Employee Salary Advance Scheme works:
Specialist scheme operators, which are usually unregulated businesses, often provide the product as part of a 'wellbeing package' to help employees with financial management. Some offer employees an app based platform which sits between the employer’s payroll operations and the employee’s bank account. The employee can then a draw down usually up to half of their accrued or earned wages before their next pay day. The scheme operators usually charge the employee a fee for each drawdown. The employer will then pay the balance of the salary (i.e. net of the advanced payments and the fees for the service) on the next payday. Employees can make multiple drawdowns during each pay cycle and can repeat this again in subsequent periods.
For many employees who do not have major debt problems, an ESAS (Employee Salary Advance Scheme) may be helpful where for a variety of reasons they need to quickly access some of their salary early.
However, for employees with limited options, there are potential risks. Set out below are ways in which employers and scheme operators could mitigate some of these risks.
The FSA says: The risks for employees and employers are:
While the product has benefits, it is important that employees and employers are aware that there may be some risks in using these schemes.
Talking Credit Unions with Chris Smith is a regular podcast dedicated to informing credit union practitioners, leaders and opinion formers on variety of industry topics. To contact Chris Smith, smithowls@gmail.com