Earned Wage Access FAQs: All Your EWA Questions Answered

Everything you want to know about offering a Jem Earned Wage Access (EWA) benefit to your employees…

We’ve discussed how the zero-cost Earned Wage Access employee benefit works, how companies use it to counter employee financial stress and loss of productivity and even debunked some of the most common myths about EWA.

Now let’s look at some of the most frequently asked questions (FAQs) companies have about implementing Earned Wage Access:

Most Common EWA FAQs

1. How does implementing EWA work for the payroll team?

The process happens in three steps with every pay cycle:

Step 1: The employer provides Jem with a simple payroll data extract with employee information (names, bank details, net salary and phone number). Jem sets up an employer profile, noting employee pay dates – we allow for multiple payrolls and pay dates per employer. 

Step 2: At the end of the pay cycle, Jem provides the employer with a reconciliation sheet containing a list of all employee withdrawals. This sheet is simply imported into any payroll system as a new type of deduction.

Step 3: Employees receive their pay, less the amounts withdrawn from Jem EWA, and the employer pays over the balance to Jem with their normal payroll run. The process begins again the day after payday.

Employee data is updated periodically, usually once per month, to ensure information stays up to date. We remove terminated employees and add new employees as needed.

2. How does EWA work for employees?

Employees register by contacting our fully automated WhatsApp chatbot; completing a 30-second verification process after which the “get an advance” option will become available on the WhatsApp menu. 

The Jem system calculates the portion of salary already earned in the pay period based on the employee's salary and payday. (Employees are typically limited to withdrawing 25% of their earned pay, though this limit can be adjusted by the employer.)

For example, if an employee earns R10,000 per month, gets paid on the 30th, and requests an advance on the 15th, they would have accrued approximately R5,000 in earnings and can withdraw up to 25% of that, which is any sum between R100 (the minimum withdrawal amount) and R1,250.

If the employee needs another advance, Jem will calculate the days worked and subtract any previous withdrawals to ensure they never exceed the total limit of 25% of their salary (or as indicated by the employer). 

Jem then pays out the requested amount, either on the same day or an instant payment, depending on the employee’s needs, and provides full support to the employee throughout the process. This means employers are not required to field questions from their employees utilising EWA.

3. How much does EWA cost?

Importantly, employers do not pay for Jem’s Earned Wage Access, it’s a zero-cost benefit you can offer your employees without taking on any risk.

Jem charges employees – not employers – on a pay-as-you-use basis for Earned Wage Access, similar to an ATM withdrawal fee. If an employee doesn’t use the benefit, there are no charges. 

For those who do use the benefit, the cost is 3.5% of the withdrawal amount plus a flat fee of R6 (for standard same-day access) or R25 (for an instant withdrawal). For example, if an employee withdraws R500 using the standard payout, they will pay 3.5% of R500 (R17.50) plus a flat fee of R6, totalling R22.50. 

Note: Jem EWA fees (3.5%) are FAR more affordable than payday lenders (20%-50%), which is why so many employers report increased employee financial wellness after implementing EWA. Additionally, some employers opt to subsidise their employees’ fees, though this is optional.

4. What if employees dispute the deductions?

Disputes are extremely rare due to the transparency of our process. Each transaction has a unique ID stored in Jem's secure system and is reflected on the employee’s payslip. This makes it easy to provide proof of the request and payout. Additionally, Jem holds individual PDF proof of payment documents for every transaction, which can be provided to an employee on request.

5. Can Jem provide reports during the month?

Yes, Jem offers a transparent and easy-to-use reporting system. Employers can track registrations, withdrawals, reasons for withdrawals, and amounts withdrawn live on their personal Jem dashboard. This dashboard shows the names, dates, and amounts withdrawn by employees.

6. How does Jem work for employees on variable (e.g. hourly) pay?

It’s up to the employer whether to include overtime/commission or use just base pay as part of the EWA benefit. When you send your monthly data update to Jem, one of the required fields is net salary. Most employers choose to provide net salary excluding overtime to allow advances only on base pay. 

7. How does EWA affect employee taxable income?

Jem’s EWA offering has no impact on employees' taxes. The early payment is akin to being paid weekly or bi-weekly.

8. Is Jem registered with the National Credit Regulator?

No, Jem is not a financial service provider. We do not issue loans or charge interest. Jem helps employers run a more flexible, variable payroll.

9. How long do employees wait to be paid out by Jem?

Standard Jem payments clear in the employee’s bank account by 20:00 the same day they are requested, provided the request is made before our 15:00 cutoff time. Requests made after 15:00 are paid the following business day by 20:00. 

Instant payments clear within 90 minutes of the request, available between 05:00 and 16:00 on weekdays.

Payments are processed on weekdays only, not on weekends or public holidays.

10. Can Jem cater for different payrolls?

Yes, Jem’s system can handle any pay cycle (weekly, fortnightly, or monthly) and multiple payrolls per employer.

11. Does the employer have to take on extra work to accommodate EWA?

No, Jem handles all requests, balance checks, and queries. The employer’s role is minimal, requiring only two tasks:

Once this is done, the monthly reconciliation file provided by Jem can be imported into the payroll system, automatically mapping deductions to each employee’s payslip.

For example: previously, Prosec Security invested some 3 hours and 45 minutes of additional paperwork and payroll adjustments to process just 5 employee advances. After implementing Jem, the process took about 30 minutes in total for many more employees to benefit from early wage access. 

12. Will Earned Wage Access get my employees into debt?

Quite the opposite. Jem is designed to reduce the risk of employees falling into unaffordable debt cycles. In South Africa, 47% of registered employees use unsecured credit, which charges exorbitant interest rates of 20-50%.

Earned Wage Access offers a low-cost substitute for loan sharks and payday lenders, with stricter controls. Employers can facilitate this at no cost, making it one of the highest-impact employee benefits available to help employees avoid debt.

13. How does Jem handle absconders withdrawing money that can’t be recouped?

Our systems are designed to handle this challenge. Employees can only withdraw money already owed to them, calculated based on their net salary and pay cycle. If an employee works for two weeks and withdraws money on their last day, the withdrawal amount can still be deducted from their two weeks’ pay, not exceeding 25% of this amount.

If an abscondment takes time to report, the remaining 75% of the employee’s pay acts as a buffer. Jem also works with your payroll team to identify abscondment as soon as possible, adapting our procedure to your internal process.

For example: A chain of fast-food restaurants has store managers who are aware of absconders first. Jem contacts the store managers each Friday to flag absconded employees, removing their access to EWA within minutes.

14. Will EWA increase absenteeism?

EWA actually tends to reduce absenteeism. When employees have access to their earned income before payday, they are less likely to miss work due to financial stress or unexpected expenses. 98% of users who take an advance do so to pay for transport to work.

For example: An employer previously offering internal advances of up to R1200 per month found that employees took the full amount in anticipation of their needs. After launching Jem, employees’ average requests dropped to R380, as they knew they had quick access to funds when needed, reducing the overall advance amounts.

15. Is EWA a loan?

No, EWA is not a loan. It allows employees to access their already-earned wages without extending credit. For example, if an employee earns R8000 net per month, they can access a maximum of 25% of their net salary (i.e. R2000). However, they only have access to this amount as they earn it. Mid-month, they would have earned half their net salary (R4000) and can access 25% of that, which is R1000.

EWA is available to all employees regardless of role, credit score or income level.

16. How do Jem’s fees compare to payday lenders?

Jem’s fees are significantly lower than payday lenders. The average cost of a two-week R500 loan from a regulated payday lender is about R100. Loan sharks can charge up to triple that amount. Jem charges only R23.50 for a standard payment and R42.50 for an instant payment. With EWA, full repayment happens the next payday, preventing debt spirals.

For example: Research among our existing customers reveals that short-term credit is incredibly expensive for their employees. Loan sharks within businesses often charge R50 to borrow just R100 for a week, a 2600% APR. Jem offers a much more affordable, convenient, sustainable and secure alternative.

17. How does Jem support employees in managing their money responsibly?

Jem offers a financial literacy tool at no extra cost, easily accessible on WhatsApp. Employees listen to real case studies about other Jem users, with lessons in financial decision-making. The voice notes cover topics such as financial planning, paying off debt, reading payslips, savings, interest rates and bank accounts, and are available in English, isiZulu, isiXhosa, and Afrikaans.

18. What if employees withdraw too much?

Jem restricts withdrawals in several ways. Employees are limited to withdrawing 25% of their monthly net pay, and only what they’ve already earned. The 25% balance accrues daily, ensuring a throttle on the amount available. Employers can also reduce the 25% limit based on their employees' needs.

For example: Since inception, the average withdrawal level across all employers with Jem EWA is only 16% of earned wages. Despite having access to 25%, employees typically use only a portion of what’s available when they really need it.

19. Are there any legal or regulatory issues we need to be aware of when using Jem EWA services?

Jem EWA operates within the legal framework of South Africa. We are not a financial service provider and do not issue loans or charge interest. This ensures compliance with labour laws and financial regulations.

20. What potential liabilities and risks are associated with offering Jem EWA services?

Jem EWA mitigates potential liabilities by ensuring transparency and security in all transactions. Each withdrawal is documented, and unique transaction IDs are provided. We also maintain high standards of data protection to safeguard employee information, minimising risks for employers.

21. How does Jem EWA fit into our company culture and values?

Jem EWA aligns with values that prioritise employee well-being and financial health. Offering EWA demonstrates a commitment to supporting your workforce, fostering a positive company culture, and enhancing overall job satisfaction.

22. How will introducing Jem EWA be perceived by our employees?

Employees generally view EWA positively as it provides financial flexibility and reduces stress. International research shows that 95% of employees appreciate and want to work with an employer who offers Early Wage access; 89% tend to work longer for such an employer. 

By offering Jem EWA, you show that you care about your employees' financial well-being, which can improve morale and loyalty.

23. What security measures are in place to protect sensitive employee data when using Jem EWA services?

Your data is safe with Jem. Our data and security are monitored by Drata, a leading US security and compliance platform, ensuring your data is secure with us. Additionally, our data is hosted by Google Cloud Services, using industry-standard encryption. Data is not shared with any third parties and is only used to provide services to your employees via WhatsApp, which uses end-to-end encryption. All of these measures are fully POPIA compliant.

24. How does Jem ensure the privacy of our employees' financial information?

In addition to our strict data protection policies (see number 23 above), employees are also required to self-authenticate using 2-factor authentication when interacting with Jem for the first time. These robust security measures ensure that sensitive employee data is protected at all times.

Unlock the Benefit of Earned Wage Access for Your Employees

Ready to enhance your workforce’s productivity and well-being with Earned Wage Access? Jem HR makes it easy to implement EWA in your organisation.