How can I help my employees during the cost of living crisis?

How can I help my employees during the cost of living crisis?

The cost of living crisis is having a significant impact on employee finances at all levels. With companies’ income also being impacted by challenging conditions, we’re going to look at some ways that we can ease the load on our employees without leaping to the obvious solution of increasing salaries.

As the well-known psychological theory – Maslow’s hierarchy of needs – tells us, people crave more than just the basics from a career, but in the current cost of living crisis, it’s likely that an employee’s focus will temporarily gravitate towards the lower safety layers of the pyramid. This seems inevitable, and it may be that employers can support those welfare elements while occasionally also reinforcing some of the higher layers. Let’s look at some examples of both.

Direct ways to protect employee finances

There are a few smart ways you can make a direct positive impact on employees’ financial circumstances, with some tax efficient or free-to-employee benefits that you can offer at low or zero cost to your business.

• Providing opportunities for flexible working or home working can significantly reduce travel costs for employees. It also has the broader benefits of being good for the planet by reducing their commuting carbon footprint, and offering the potential for lower infrastructure costs through minimising office space and subsequent energy use.
• Salary sacrifice schemes are also a great idea, allowing employees to reduce their tax and national insurance contributions by committing to a reduction in salary in exchange for a tangible benefit provided by an employer. Examples include pensions, cycle to work schemes*, electric cars and wellbeing support such as a helpline or online fitness classes.
  A bi-product of salary sacrifice schemes is that they also reduce employer NI contributions, which can either benefit your bottom line or could be passed on to the employee e.g. through increased employer contributions in a workplace pension scheme.

  Workplace pensions may not seem like a high priority during a cost of living crisis, but providing for the future is always important and we should encourage employees not to lose sight of this, even in difficult times.

• If we can be confident that a cost of living crisis is temporary, it might be worth considering one-off bonuses as an alternative to a pay rise. These can help employees through a difficult period, while reducing the long term financial liability on you, the employer.

Improving employee wellbeing as well as finances

There are many things that we can do which benefit the wellbeing of our employees at minimal cost to the business. Many of these ideas are driven by understanding the people that work for us, and recognising what is important to them beyond their monthly payslip.

• Having a corporate membership of an employee perks scheme such as Perkpal*, YuLife* or PerkBox* means that you can offer discretionary benefits to employees in the form of discounts with their favourite retailers or hospitality businesses. Reward credits can also be linked to employee performance or other worthy reasons such as recognition for long service or winning a team competition. Many providers also offer wellbeing services.

No benefit is trivial if it’s targeted appropriately, so the HMRC’s trivial benefits allowance is a bit of a misnomer, but in simple terms it allows you to provide low cost (max £50) gifts to employees with no tax liability. A thoughtful manager might purchase a small birthday present for a member of staff which is personal to that individual and makes them feel valued and understood, or you might take your team out for lunch as a motivational gesture.

• Providing snacks and drinks in the office is another way to show that you care about your employees’ needs, while also reducing their work-related outgoings – all at relatively low cost to your business.

Professional advice and support

We all need professional help to get us through difficult situations sometimes, so it’s also worth considering providing access to helplines for personal finances and mental health. This type of support is often included within employee benefit schemes such as Perkpal* (see our earlier note on this).

Need some personalised advice about non-salary related benefits for your workforce? Contact us for advice that will have a positive impact on employee finances, team morale and perhaps even your talent retention rates.

*Here at Parsons we are signed-up with PerkPal and Green Commute Initiative. We know there are other providers out there though, so if you’re seeking a scheme for your employees be sure to do your homework and choose the partner that best suits your needs.