A step-by-step guide to exploring emergency savings accounts via payroll

October 9, 2025

Sara Maginn Pacella

“Money for a rainy day” is a phrase synonymous with emergency savings – something that we hope to have for major expenses, not for our day-to-day lives. Unfortunately, many people dip into their savings more often than they’d like. A recent Forbes survey found that nearly 60 per cent of Generation Z dips into their savings at least monthly (with some accessing their savings weekly or even daily), as do 47 per cent of millennials, 37 per cent of Generation Xers and 22 per cent of Baby Boomers. With numbers like that, it’s no wonder that employees are seeking out programs with their employers to set up payroll-related emergency savings accounts.

HCM Podcast

Produced with Google Notebook LM Using AI Narration

What is an emergency savings plan?

An emergency savings plan, or emergency savings account (ESA), is an employer-sponsored benefit designed to help employees automatically set aside money from their paycheques for unexpected expenses or emergencies.

The rise of emergency savings programs

In January 2024, the U.S. Department of Labor authorized employer-led, pension-linked emergency savings accounts (PLESA) as short-term savings accounts to allow employees who participate in such plans to withdraw as often as monthly without receiving tax penalties that are normally imposed when withdrawing early from such an account.

Early adopters of ESA programs are setting strong examples.

Delta Air Lines created an emergency savings program to help American staff increase their financial literacy through an online instruction program, coaching and an emergency savings account. In an article about the program, Delta said, “Participating employees receive $750 from Delta deposited directly into the Fidelity Investments emergency savings account opened as part of the program. In addition, Delta matches the first $250 of the employee’s personal contributions to the same account and covers estimated taxes so the employee can access the full $1,000.”

Starbucks introduced a program for their American employees called My Starbucks Savings that offers automatic paycheque savings, including credits added to the account in $25 and $50 increments at key employment milestones, up to a maximum of $250.

” Effective communication will be crucial to successful implementation and promotion of your program. ”

A Canadian perspective

While ESAs are not as formalized or common in Canada, there has been an increased demand for Canadian employers to explore such programs to support the financial wellness of their employees.

Peter Tzanetakis, president and CEO of the National Payroll Institute, discussed data from Canada’s Financial Wellness Lab, showing that four in 10 working Canadians are financially stressed, and only one in seven workers believes their employer is doing enough to help them with the rising cost of living expenses. He told Benefits and Pensions Monitor that he sees a growing demand for employer-supported emergency savings accounts and believes that there should be some legislative changes here in Canada and promotion of programs that allow employees to direct portions of their pay into shorter-term savings accounts. Tzanetakis said, “All the data really points to this short-term need for funding emergencies and having that buffer.”

How do ESA programs benefit employees?

Emergency savings plans have numerous benefits for both employees and employers.

ESAs benefit employees and employers by:

Creating a safety net for unexpected expenses;
Allowing employees to rely on their savings instead of loans with interest rates;
Decreasing financial-related stressors allow staff to increase their overall productivity;
Providing increased financial literacy and wellness for staff; and
Showcasing that employers value employees.

Due diligence is key in setting up new employee savings accounts

Like any new endeavour, research needs to be invested in the creation of employee savings accounts. The following should be explored when undertaking such an employer-sponsored program:

Assess employee wages to ensure they are paid fairly and will be able to participate in such programs;
Explore employee participation in current savings programs to determine the potential level of participation;
Survey current employees to determine whether an employee savings account would be desirable to them and what key aspects of such programs would be important to them;
Research ESA providers that will adhere to local regulations and compliance requirements before selecting a savings vehicle for your staff;
Determine how employee matching benefits will work for ESAs compared to traditional retirement savings products such as workplace pension plans and private savings (i.e., group or individual Registered Retirement Savings Plans, Tax-Free Savings Accounts or Pooled Registered Pension Plans);
Seek out providers that can offer your workplace automatic payroll deductions as well as the ability to swiftly customize, adjust and pause contributions at the discretion of the employee, with no fee for doing so, and no fee associated with withdrawing from the account;
Integrate your ESA program into your financial wellness and education program so staff can make informed decisions about your program and other related financial decisions; and
Determine how you will measure the success of your program (i.e., participation, inquiries) and how you will promote this program to new and current staff.

Launching your program

Effective communication will be crucial to successful implementation and promotion of your program. Regular updates through multiple channels (e.g., staff newsletters, email, employee manuals, announcements at town halls or flyers in the break room) and step-by-step information that will make it easier for people to participate will ensure better uptake among employees, particularly when you ensure that your payroll configuration allows for seamless automatic ESA deductions.

Survey for evolved ESA success

When setting up payroll systems for ESA deductions, do not stop there. Continue to survey staff to determine the effectiveness of these benefits. As employees’ needs evolve, check if there is more that can be done. Investing in financial wellness programs, such as emergency savings via payroll, is an excellent way to demonstrate that you are also investing in your employees’ future

What are your thoughts on