By Joanne Moseley and Martha Kent from the Employment Team of Irwin Mitchell (www.irwinmitchell.com)
In recent years, there have been some startling statistics about employees’ financial wellbeing and the impact this has on the workplace. One survey found that 70% of employees reportedly admitted to wasting a fifth of their time at work worrying about their finances and in another, one in four employees said that financial concerns impacted their ability to do their job.
The cost of living crisis has exacerbated this trend. Employees are becoming increasingly worried about whether their income will go far enough to support the basics of life and how long it will take before inflation starts coming down.
The ONS has reported that between March and June 2022, 57% of adults who had seen their cost of living increase had begun to spend less on non-essentials, while 35% spent less on food and essentials. Between August 2021 and August 2022, domestic gas and electric prices increased by 96% and 54% respectively causing increased pressure on already tight budgets.
The business case for helping staff cope with cost of living increases in costs
Given that employees now report financial stress as the highest cause of stress outside of work and 15% employees consider that financial stress causes a decrease in their productivity, there’s not only a moral argument to supporting employees more comprehensively to manage their financial wellbeing, but a business argument too.
One key issue for employers is keeping up with the rate of inflation whilst still trying to run a successful business. The ONS reported at the end of the year that while average regular pay among employees increased by 6.4% between September and November 2022, on average employees still face a real terms pay cut of 2.6% since the start of 2022.
You may need to think outside of the box in order to be able to support employees without compromising the financial security of your business.
Do staff know about the benefits you already offer?
One of the first points to consider is whether employees are aware of the benefits you already provide to them. These might include free or discounted prescription glasses or eye tests, healthcare, a cycle to work scheme, assistance with travel costs and mental wellbeing support. Reminding employees what you offer, where they can access information about these and encouraging them to use existing benefits doesn’t cost anything.
You could also consider making use of benefits platforms, something we can offer as part of our bank of hours packages.
Low cost benefits
You might also consider offering additional, alternative benefits. The extent and nature of these will depend on your set up and whether you can contribute towards the cost. But it is always worth bearing in mind that some benefits cost you nothing or very little. Some examples of benefits you could include are considered below.
1. One off bonuses
You might not be able to commit to making pay rises across the board but you may be in a position to make a one-off cost of living bonus to support your employees and help them feel valued.
2. Allowing staff to work flexibly to reduce commuting costs
If you don’t already do so, consider allowing those staff who can, to work flexibly so that they can reduce their travel costs and make days in the office productive and worthwhile. Introducing set office days or giving staff complete flexibility to arrange their working time is a real-terms benefit that many employees want.
Plus, it will allow staff to save money and could also reduce resentment at having to go into their workplace only to sit in front of a screen on virtual meetings when they get there.
You could also consider introducing a four day working week or allowing staff to work compressed hours, to give them more free time and reduce commuting costs. A recent study has indicated that a four day week does not impact on productivity and, in many cases, employees are motivated to work harder in order in exchange for a shorter working week (see our article on this for more information).
3. Directing staff to reliable information
Another cost-free or low-cost way to support financial wellbeing directly is to signpost employees to useful resources to help them manage their finances. The Money and Pensions service offers some free advice on this and there are a variety of useful courses online.
4. Providing an additional day’s holiday
Rewarding all staff with a day of leave to allow them to focus on their wellbeing, or an additional day’s holiday, will demonstrate that you recognise their hard work. Alternatively, you could allow employees to give back a certain number of days’ holiday and allow them to work and be paid for that time. You must ensure that they still take at least four week’s leave each year.
5. Providing salary sacrifice schemes
You could look at salary sacrifice schemes (where employees sacrifice pay for a non-cash benefit) to help with the costs of green energy products and child-care.
6. Providing meal subsidies and other benefits
You could take a leaf out of John Lewis’ book and offer staff hot meals during their shifts to support them, or you could opt to provide tax-free rebates (where possible) to offset some of the costs of working from home such as broadband and home-office furniture.
You might be able to provide staff with reduced cost-access to the products and/or services your company provides – such as vouchers for staff of retail companies or free legal advice for employees of law firms. This should cost you less than an equivalent benefit provided by a third party.
You could also alter the benefits you currently offer to suit your employees’ needs. Since the pandemic, health-related benefits have been increasingly important to staff (particularly being able to access online GP advice) as well as benefits such as pet insurance. Employees’ priorities may have changed and you might be able to tailor your benefits package accordingly.
Attracting and retaining talented staff
However you decide to assist your employees through this difficult period, we know that demonstrating your commitment to them is essential if you want to retain and attract talented staff. It’s worth investing time and, if you can, money, to ensure your employees feel sufficiently valued and supported and can thrive at work.
Wellbeing isn’t just about pay and benefits. Your staff may also want a career structure which allows them to develop and move on, will want to be recognised for their achievements and will want to work in decent environment where they feel respected and valued.
These concerns should not be an after-thought when considering your recruitment, retention, and employee wellbeing strategies.
