Cost of Living Crisis- how can organisations support their employees?

The cost of living and the current economic environment is affecting everyone.  A recent CIPD survey revealed that one in four employees said that money worries affect their ability to do their jobs.

Many organisations are thinking about what support they can give to their employees and workers at this time.

Ways to support your employees during the cost of living crisis

1. If possible, offer to give employees a cost-of-living bonus. If this is a path open to you, you’ll need to assess the impact on all individuals, particularly for those receiving Tax Credits or Universal Credit, as this approach may have consequences for those on benefits.
2. Offer flexible working to support individuals who need to take on a second job. Of course, you will need to assess the implications for the business, particularly if you have restrictive covenants in place, as you want to avoid a conflict of interest or burnout. Remind Employees to ensure they understand tax implications for undertaking multiple employments. Also be mindful about your obligations under the Working Time Directive that they do not exceed the 48-hour week and the importance of looking after themselves and not getting ‘burnt out’ working multiple jobs (which could in turn impact their effectiveness on the work they do for you).
3. Communicate free resources that are available to all employees and workers. Let your workforce know they can get free, confidential and independent money and debt advice from the Government.
4. Promote all the benefits you currently offer and how to make the most of them. For example, counselling services help with stress and anxiety.
5. Take advantage of one of the many discount cards and programmes for businesses. This could enable your employees to reduce the cost of their weekly food shop.
6. Offer support with working from home costs. Employers can give employees who are contractually required to be home-based workers a cash allowance of £6 per week that is tax/NIC free under the conditions of the Working from Home allowance. Alternatively, if the allowance is not paid, the employee can claim tax relief on the same amount from HMRC.  Note: this allowance is no longer available for hybrid working.
7. Set up a salary sacrifice scheme. These allow employees to contractually reduce a portion of their salary for a non-cash benefit that is more tax/NIC efficient.  The most beneficial arrangement is pension salary sacrifice, as the pension scheme and contributions stay the same but net pay increases due to the NIC savings achieved.  The employer also benefits from NIC savings, which can be significant.
8. Consider offering free lunches to employees. Provided the HMRC exemption conditions are met, this is not a taxable benefit in kind for employees.
9. Start to normalise conversations about money worries. Create an environment that makes individuals feel heard and understood. Train managers to provide the right support to their teams.
10. Bring in the experts and provide workshops for financial management, financial planning, budgeting etc. You might be surprised how many people lack knowledge on these issues.
11. Get creative. Find a way for employees to share ideas and practical advice to support each other through this difficult time.

It is worth noting that in-work poverty is real, and even before the cost-of-living crisis, it affected one in eight workers in the UK.

What wider issues should organisations address?

So, what can you do on a wider scale to support your workforce? Here is the outline of a three-pronged approach to address the key issues:

• Review your reward strategy. Are you paying a fair and liveable wage, allowing employees to lead a dignified life with access to opportunities and choices? Are you maximising your benefits programme?
• Empower your workforce. As part of your wider wellbeing strategy, empower your workforce to support their own financial wellbeing.
• Develop a learning culture. Show individuals a clear path to progression by developing skills, removing barriers and challenging perceptions.

What are other companies doing?

• Amazon: a special payment of £500 for frontline workers. Tens of thousands of hourly paid employees, including full-time, part-time and seasonal workers.
• Aviva: a one-off payment ranging from £300 to £1,000 for employees earning up to £35,000. The company is also removing car park charges at offices including those in Birmingham and Sheffield.
• Barclays: brought forward its annual pay review (normally effective March) to August.
• Hays Travel: introduced the “Big Hays Travel Thank You” initiative. This sees all employees being entered into a prize draw once a month, with new prizes announced following each draw.  For example, the September winner had all their bills and mortgage payments covered until March 2023.

Remember that a one-size-fits-all approach is unlikely to be as successful as an initiative that is designed for a particular business and specific employees’ needs.  Thinking creatively about what can be done and consulting with people to identify what is needed should help to provide as great a benefit as possible.   It’s also necessary to be mindful that some changes may disproportionately adversely impact on employees who work part-time or have caring responsibilities, so always check for any unintended consequences changes could bring.

Most of all, listen – your staff are best placed to tell you what they need. Be a source of support during this difficult time and be rewarded with, hopefully, improved staff satisfaction and reduced turnover.

If you would like to discuss issues and ideas raised in this blog, please contact us at info@peoplebusiness.co.uk