EWA and the Payroll Problem
Alan Kay said people serious about software should make their own hardware. The same logic applies to Earned Wage Access.
What is EWA?
Earned Wage Access lets employees access wages they’ve already earned before payday. Instead of waiting until the end of the month, an employee who has worked 15 days can access a portion of those 15 days’ wages.
No more end-of-month cash crunches. No more borrowing from loan apps. Just money people have already worked for.
How EWA Works Today
Most EWA providers use a simple formula: take the monthly salary, divide by 30, multiply by days worked, then apply a percentage cap. That’s the advance limit.
At month-end, they send the employer a deduction file. HR uploads it to payroll, the advances get deducted, and everyone moves on.
This approach has scaled well. It’s how most employees in Kenya access EWA today. But there’s room to go further.
The 1/3 Rule
Kenya’s Employment Act (Section 19) requires that employees receive at least one-third of their wages after deductions. EWA advances are deductions.
To know the legal maximum advance, you need gross pay, statutory deductions, and any existing deductions. Without payroll data, EWA providers don’t have this.
So they use conservative limits. 30-50% of base salary is common. Safe for the provider, but not always right for the employee. Some could access more. Others, with existing SACCO or HELB deductions, might already be near their 1/3 limit.
What HR Teams Deal With
The deduction file approach means HR teams handle edge cases manually:
- Someone absconded without notice
- Someone took unpaid leave, so their advance exceeds their final pay
- Someone resigned mid-month
- The file format doesn’t match the payroll system
It’s manageable, but it’s extra work during an already busy time.
EWA Built on Payroll
When EWA and payroll share a foundation:
Actual earnings visibility. You know what someone has earned, including overtime, allowances, and deductions. Not an estimate from base salary.
Automatic deductions. Advances deduct from payroll directly. No files to upload. No manual data entry.
Accurate advance limits. With payroll data, you can respect the 1/3 rule properly. An employee with few deductions can access more. An employee already committed to SACCO, HELB, or other obligations gets what’s actually available to them, not an arbitrary cap that might still put them over the legal limit. Everyone gets the right number.
No reconciliation. Same data, nothing to reconcile.
The Hardware Lesson
Alan Kay, the computer scientist who helped invent the modern GUI, said: “People who are really serious about software should make their own hardware.”
When you control the whole stack, you can build things that are otherwise impossible. Apple proved him right. The same applies to EWA.
Building payroll integrations is hard. Every employer uses different software. Many use spreadsheets. The salary-over-30 approach exists because it got EWA to market and into employees’ hands. That matters.
But for EWA to reach its full potential, the payroll connection opens new possibilities.
Why This Matters
At Kazisafi, we’re building payroll with EWA in mind from day one. Not as an afterthought. As part of the architecture.
We’re not launching EWA yet. But when we do, it will use actual earnings, calculated from actual attendance, deducted automatically from actual payroll.
If you’re serious about EWA, the payroll foundation matters.
If you’re running payroll on spreadsheets or expensive enterprise software, try Kazisafi.