Although recent falls in the rate of inflation have been welcome, prices are still rising and the cost-of-living crisis continues. Interest rates are at their highest level in over 15 years, the energy price cap has increased and the festive season has brought its own financial pressures.
Businesses are facing their own pressures and pay rises are not always possible. However, there are other ways to help employees combat financial challenges. Here we look at some of the ways firms can support employees in navigating the cost-of-living crisis.
Negative health impact
Around half of workers agree that money worries can have a negative impact on their mental and physical health, according to research from Nuffield Health.
This has a knock-on impact on the businesses that employ them. A third of employees said that they accomplished less than they would like due to emotional problems or worries, and a similar number felt they were less careful than usual, according to the Money and Mental Health Policy Institute.
Open up about money
Managers and senior executives should try to normalise money conversations at work. Opening up about the money issues confronting the business can help improve people's understanding of financial wellbeing and encourage better conversations. ?
Educate staff in financial literacy
Businesses can provide staff with financial benefits education, debt counselling and advice on debt consolidation.
There are plenty of resources, many of them free, to help staff who need advice on making their money go further. There is also a range of apps that can help employees manage bills, keep a track of spending and find best deals for purchases.
Enhance emotional support
Money worries can have a significant negative impact on wellbeing and can cause mental health issues. Employers should signpost individuals towards the relevant emotional wellbeing support available to them. This may include cognitive behaviour therapy sessions (CBT) or employee assistance programmes (EAPs), which provide individuals with direct access to specialists.
Improve the overall package
Increasing salaries in line with inflation is not an option for many organisations. However, there are other ways to improve the overall remuneration package for employees.
These could include paid-for meals at work, access to an EAP to support employees with stress and debt problems, and access to employee discount schemes.
Offering salary sacrifice as an option for cycle to work, pensions and childcare voucher schemes is also something businesses should consider. These not only help employees through financial hardship but could also save the employer national insurance contributions (NICs).
Of course, your firm may already offer benefits like season ticket loans, interest-free loans or gym memberships: make sure staff are aware of them.
Use tax-efficient gifts
The trivial benefits scheme allows an organisation to give its staff a non-cash gift, such as a gift card, of up to £50 with no tax or national insurance to pay.
There is a £50 limit per gift for each employee and firms can use the trivial benefits scheme more than once a year as long as it doesn't become a part of the employee's regular salary or contract. Company directors are limited to £300 per year through the scheme.
Be flexible and allow hybrid working
Businesses can help to reduce the financial pressure on staff by reducing their work-associated outgoings. For example, this might involve allowing employees to work from home so they can lower travel expenditure or by offering flexitime to avoid peak-time travel expenses. In addition to reducing commuting costs, flexibility in working hours and remote working policies can help employees to manage stress and offer support with childcare.
Offer direct financial help
If there is capacity, set up an emergency fund or grants that employees can apply for if facing financial hardship. Another way could be to provide employees with short-term interest-free loans to cover unexpected costs.
The cost-of-living crisis will continue to put pressure on both household and business finances during 2024. We are happy to advise on the best approach to suit your circumstances. Please contact us for information on payroll, cashflow, NICs or other related matters.