The cost of living crisis: Supporting your employees

The cost of living crisis is squeezing salaries across the UK. Recent polling has suggested that some 72% of employers expect the financial situation of their workers to worsen over the next 12 months.

In certain sectors, businesses have offered significant pay increases or lump-sum bonus payments linked to inflation. However, with many employers also struggling with inflationary pressures, some are considering other cheaper, or cost neutral, options to help their employees combat the impact of soaring inflation and higher bills.

There is good evidence for why employers should be considering different types of support, as evidence links financial wellbeing to both employee mental wellbeing, and performance (CIPD study).

A well-rounded programme of benefits and financial schemes will entice and retain talent. Importantly, not all benefits important for guiding people through a financial crisis will be purely financial. Programmes intended to increase general employee health and wellbeing can make a particularly positive impact when personal finances and general wellbeing are under pressure.

In consultation with your employees (and, if relevant, any recognised trade union) an employer might consider introducing the below benefits:

Financial benefits

  • Earned pay access - a mechanism by which employees can draw down some of their earned wages before payday.
  • Debt advice/guidance – this could include internal support (for example via an employee assistance programme or financial wellbeing seminars) or signposting external support for debt management e.g., via the government’s MoneyHelper service.
  • Discounted shopping – this enables employees to save money on shopping, assisting with a wide range of expenses including food, certain healthcare provision (for example opticians), school supplies, stationery or lifestyle items.
  • Salary sacrifice – childcare vouchers, pension contributions, season ticket loans, car allowance and cycle schemes are examples of salary sacrifice schemes which deliver tax benefits and helpful assistance to employees.
  • Holiday trading – allows employees to buy or sell holiday entitlement (subject to legal restrictions) during a defined annual window. Employees electing to sell their annual leave will receive additional pay which can be used to cover daily expenses. There are limits to the number of days which can be sacrificed, as the right to annual leave is protected by law. 
  • Flexible working – allowing home working or amended hours will encourage people to make financial decisions based on their family and travel arrangements and take into account other costs to generate a working pattern better suited to their lifestyle. A relaxed approach to second jobs for junior workers (subject to being mindful of working time limits and conflicts of interest etc) can allow employees to explore alternative income streams.
  • Additional work - enabling staff to earn more money with the business.  An interesting one we have seen has involved giving store staff the opportunity to work additional hours from home helping to staff the company's call centre.

Outside of the abovementioned schemes and benefits, employers might wish to generally assess and rebalance their benefits package if this has not taken place since the Covid pandemic. Collect feedback on which benefits employees value most and consider removing any expensive benefits that employees place little value on and/or increasing cheaper benefits that are valued.

Wellbeing benefits

At a time of financial downturn, and in recognition of the risk of recession within the UK economy at present, the pressures on personal and family finances, mental health and general wellbeing are heightened.

With that in mind, employers might consider how they protect their talent beyond offering financial support. Other benefits being offered in the market to support the general wellbeing of employees include:

  • Increasing annual leave
  • Sabbaticals
  • Unlimited annual leave
  • 4-day week
  • Free food and drinks
  • Bring your dog to work
  • Private medical insurance
  • Life insurance
  • Free flu vaccinations
  • Volunteering leave
  • Fertility leave
  • First day of school leave

If you would like any advice on how you can best support your employees and/or how to implement any of the above ideas, please do get in touch.