According to the Office of National Statistics (ONS), wages in the UK have seen an on average 5.2% rise, but due to the rise in cost of living, wages fell in real terms by 2.8%. Ever since late 2021, inflation has been on the rise, and it does not seem to stop any time soon. With energy bills increasing over 200% compared to last year many people, especially at the lower end of earnings, are wondering how they will survive financially over the coming months and potential years as levels of debt increase. This worry will undoubtedly effect people’s mental wellbeing as money worries is one of the leading causes of stress (work is the second one).
People with money concerns may bring those concerns and stresses into the workplace, which could result in them being less engaged and motivated as they are partially focussed on solving their financial concerns. Therefore, employers can benefit from supporting staff with their financial wellbeing to ensure they have less stress in their lives due to money concerns, but also, be more productive and engaged with their work.
What can you do as an employer to help your employees who are worried about money?
Signpost employees to money advise and debt relief services
There are organisations that can provide free to access guidance and support on managing personal finances. Signposting employees to support, such as those organisations listed below could be helpful:
- https://www.citizensadvice.org.uk/debt-and-money/
- Money Helper (previously the Money Advice Service), initiative by Money and Pensions Service (UK government)
- The Money Advice Trust also operates the National Debtline
If you provide an Employee Assistance Programme (EAP) for your staff you may find that this includes access to financial wellbeing training, guidance and debt support.
Consider salary advance options
The BBC reported on 7 November that millions of people in the UK have little to no savings to deal with unexpected financial emergencies such as the breaking down of a car or a utility within their house. Having a lifeline available to deal with those emergencies can help employees and one way an employer can assist is by allowing staff to ask for salary advances. Employers should be cautious on how this is done to ensure the employee does not end in debt with the employer.
One way of doing this is to allow an early payment of part of the monthly salary being paid earlier, which is deducted at the end of the month to balance it out. Another option is to pay a part (full) month in advance but have this ‘paid back’ through reductions in the subsequent salary payments to reduce the burden of the advance over several months.
Not many employees will take advantage of this offer, but it can help relieve those pressures of unexpected costs. Employers should discuss with their employees why they need the advance and ensure that the employees don’t put themselves in a worse position by taking the advance.
Of course, this option may only be appropriate where the employer is financially sustainable to be able to afford such a scheme.
Where possible allow people to work from home (more often)
Working from home does not only provide people with the freedom to manage their work/life balance better, but it also saves on traveling costs. With fuel prices and public transport costs going up as well, employees could save money by working from home. Over the winter months, working from home may add to the more expensive heating and electric bills, so this option will only be a cost saving option for those with an actual commute.
Employers can contribute up to £6 tax free per week to employee’s costs when working from home, but this is only permitted if the employees have no office to go into or where the office is too far to realistically travel to each day. You can still make a contribution to their energy costs if the employee is not eligible, but the payment will be subject to the usual tax and NI and may be considered by HMRC to be a benefit in kind.
Offer a one-off bonus or an inflationary increase
More money does not resolve all issues and only a handful of employers have matched their inflationary raises of salaries with the actual inflation rate. This is because employers too are struggling financially following the increase in energy costs and the reduction for some charities in funding as covid funding schemes are winding down. The CIPD in their latest Summer Labour Market Outlook found that the voluntary sector on average awarded pay rises of 3%. This is already lower than the average of 5.2% but is significantly lower than the latest inflation numbers at 10.1% (CPI).
Wages are therefore falling in real terms meaning that people have less money to spend after paying all their basic needs and bills. One way to overcome this is by paying a one-off bonus to help employees get through the winter months where costs tend to be higher with increased energy costs and to get through the holiday season. Although the practice is more prevalent in private sector organisations, Roots HR has assisted several of our social sector clients with their desire to help employees through a ‘winter bonus’ scheme.
For most employers, a scheme of this nature is only offered to their lowest paid employees who earned less than a certain amount (£30,000 as an average). Employers should clearly communicate with staff that any such payment is a one off and subject to the usual deductions for tax and NI.
These changes can all help with improving the mental wellbeing of your staff when they are working remotely. Get in touch with us if you need help to create policies for your social enterprise or charity that will benefit your workplace staff today.
