How employers can help their employees with the cost of living

With the rising cost of living, employers are looking at how they can help their employees to manage the crisis in order to retain and recruit a happy and productive workforce.

It is impossible not to be aware of the increased cost of living over the past couple of years. Prices are rising and goods and services cost considerably more than even a few months ago.  

Now, new research from the Chartered Institute of Personnel and Development (CIPD) has found that fewer than half of employees they surveyed felt that they could keep on top of their bills and financial commitments. 

Another third said that they could, but still struggle to do so on occasion.  

Therefore, it is unsurprising that many employers are looking for ways to assist their employees in dealing with the cost-of-living crisis, especially when you consider that the additional financial stress that employees are facing could lead to greater absences from work and a reduction in employee productivity.    

However, employers are also under financial pressures themselves and therefore need to consider what support they can offer on a cost-effective basis. 

Financial support

When you consider that financial worries are often the biggest cause of stress for employees, there are a number of ways that employers can provide further financial support and encourage better work beyond simply increasing salaries.  

Employers may wish to consider:

• Paying staff bonuses or providing vouchers. These are not necessarily tax advantageous, but can provide one-off support where needed. 
• Making full use of the tax-free benefits that can be provided, or available exemptions. Our blog post on the exemptions can be found at Benefit In Kind Exemptions.  
• The provision of free fruit in the office can be covered under the trivial benefit exemption (£50 per gift per year (up to a maximum of £300 for directors)). This exemption can also help with recognising special employee events. Please note that this exemption can only apply where it is not cash, or a cash voucher and it is not given in recognition of work done. 
• Making use of the annual function exemption of £150 per employee in a year can help an organisation to boost staff morale. 
• Other benefits that can be provided include: health screening and medical check-ups, employer pension contributions, or employer-funded training.
• Flexible benefit schemes, where employees can choose what matters the most to them. Often, benefits such as company cars, childcare provision, private health insurance, additional pension contributions or buying/selling holiday are included in these types of schemes.  
• Increasingly, employers are looking at income streaming as an alternative, where their employees may otherwise use payday lenders. Income streaming allows employees to take their salary in advance, with amounts taken being deducted from net pay at the end of the week or month.  

Discussing finances at work 

In addition to the financial support that can be provided, employers may wish to highlight the existing support they provide for their employees.  It is often the case that these benefits go underused, as many employees are unaware of the services available.  

It is recommended that employers put in place a financial wellbeing policy, which includes details of the benefits and support available to employees.  This should be highlighted to all employees regularly.  

You may also wish to provide training to staff on dealing with their personal finances and improving their financial situations.  

Finally, it is important to create a situation where your employees feel comfortable in discussing their financial issues.  Employers should look to de-stigmatise discussing money problems in the workplace and provide an environment where staff feel free to share their problems with colleagues and management.  

Staff retention 

During a period of economic difficulty, staff may be more active in looking for new jobs in search of greater income.  However, you should not make the mistake of assuming employees are only looking for more money. 

Creating a positive work environment remains a key element in staff retention and ensuring you have the best workforce possible.  This will also help employees in dealing with stress which may arise from financial problems.  

Incentives such as flexible working and hybrid working should not be ignored and, in fact, hybrid working can potentially help an employee’s financial situation by reducing their commuting costs.   

Other incentives to consider may include:

• Providing training to help with career development 
• Awarding shares to employees to motivate those staff who are key to your business’s success
• Providing team lunches or breakfasts to staff, and encouraging socialising between employees
• Agreeing with local businesses (such as gyms) reduced member rates for your employees
• Providing benefits such as access to discount sites, discount cards or vouchers

There is a great deal that employers can be doing to assist employees during times of difficulty, and being flexible and creative can help find new ways.  

This may not only help your employees, but may also help you and your business to recruit and retain a more happy and productive workforce.  

Further information

If you have any queries or require our assistance in reviewing the benefits you provide to your employees, please contact your normal Bishop Fleming contact or a member of the Employer Solutions team. 

For more information on employer issues check out our Employer Solutions Knowledge Hub.