5 ways employers can help during the cost-of-living crisis

As prices for food, energy and heating continue to rise the ongoing cost-of-living crisis means many employers are looking for ways to better support their teams.

While cash is usually king, it’s not as simple as just topping up pay checks: even for businesses that can afford to offer increased salaries or one-off payments, inflation is a permanent change. If the rate falls to zero tomorrow, the 10% rise since last year is still reflected in prices. The whole crisis can’t be covered with a temporary payment, but it could form part of a mix of measures.

So, what can you offer employees? We’ve looked at five ways of helping staff, that don’t rely on cash alone. 

1.      Direct pay alternatives to more salary

When prices are rising fast, help that’s months away seems distant, so you could consider increasing the frequency of pay reviews, halving the period, for example. If so, communicate clearly that the change employees will see is a “half-step”, compared to what they’re used to. However, if employees are used to a certain pattern of reviews and what you’re proposing isn’t an improvement on that, you should take advice from your HR advisor.

Another option is to offer a one-off cost-of-living payment.  By making a lump sum payment to support your employees with cost-of-living, you won’t increase your ongoing salary costs.

2.      Help with travel costs

Oil and energy obviously affect transport costs. The most straightforward option here is less travelling: encourage or allow more remote working. Communication is always key, and if this is to be temporary, make that clear. Other options might include:

• Offer loans to allow employees to buy season tickets and you can reclaim the cost from their wages; this is an interest-free loan, but a special-purpose one, which can help address concerns about repeat requests, or employees borrowing and borrowing with no route to repayment.

• If your teams travel to work by car, encourage or suggest carpooling, and offer to arrange it to remove any awkwardness. Help people to set parameters around shared costs, and shared spaces, to keep it harmonious.

• Review your mileage expenses procedure – you might want to temporarily increase the HMRC rate to reflect current prices for business travel.

3.      Unused holiday entitlement and pensions

Some team members might be willing to have less holiday and consider selling back any unused leave. The UK’s statutory entitlement (28 days including bank holidays) is a legal minimum that cannot be traded, but if you offer more than that, the option of buy-back might be worth considering.

Another way of helping is to offer salary sacrifice as part of your pension scheme. Pensions are complex, and you’ll need professional advice here, but the idea is that an employee who was paying £100 per month into a company pension, can request a pay CUT of that amount, on condition that the employer redirect the money towards the pension pot instead of the pay packet. Pension contributions tend to be tax free, but employer and employee were paying national insurance on this amount, and now they aren’t. Some employers choose to calculate the amount they are saving in NI and put that into the pension or towards other benefits, though there’s no obligation to do that.

4.      Discounts and salary advances

There are various discount and coupon schemes that employers can get involved in, generally working on the logic that getting together and buying in bulk means lower prices. Employers may even be able to negotiate directly with some vendors and local businesses to obtain staff discounts.  

As an alternative to loans, working with one of the salary advance services could be another option. The idea is that, halfway through the month, you’ve already earned half your pay; you’re getting that money, even if dismissed directly, so the provider can pay it out and recoup it from the next pay packet with almost no risk. The employer has a bit of admin to do, but there’s no huge cost involved. Employees should budget carefully to make sure they don’t find themselves in difficulty at the end of the month, though.

5.      Financial advice and mental health support

For some team members, financial management training might help as much as hard cash. Maybe a struggling employee chose to pay more than the minimum into a pension a long time ago and has forgotten.

Even if it’s not formal training, local financial advisors or even your existing benefits providers may offer ways to help your staff get advice on benefits such as pensions, savings and personal finance management.

Employers do have a legal duty to protect the health, safety and welfare of workers, so consider making counselling or other mental health support available to any who need it. There are some very cost-effective Employee Assistance Programme (EAP) services available, such as Spectrum which offer helplines and counselling support.

We know that the cost-of-living crisis is affecting employees in many different ways, so take any issues you become aware of seriously, whether that means by signposting towards professional help or just a manager taking extra time to support a member of their team.

For more advice on how to help support your employees, or for any other queries, get in touch via our contact page.