Employees are struggling with the ongoing cost-of-living crisis against a backdrop of rising inflation and interest rates, with almost half of workers believing that money worries had a negative impact on their physical and mental health, according to research from Nuffield Health. 

At the same time, the knock-on business impact should not be underestimated. A third of employees said that they accomplished less than they would like due to emotional problems or worries, and a similar proportion – 32% – felt they worked less carefully than usual, according to the Money and Mental Health Policy Institute. 

But with business and benefits budgets under pressure, what practical support and help should employers be offering their staff to help them weather the storm? 

Normalise conversations about money

Senior leaders should act to normalise money conversations at work, showing empathy for employees and employing an approachable management style. Opening up about money issues that you or the business has confronted can help improve people’s understanding of financial wellbeing and encourage better conversations.   

Educate staff in financial literacy

Businesses can provide staff with financial benefits education, debt counselling, advice on debt consolidation and open discussion in workshops, says Marc Holl, Head of Primary Care at Nuffield Health. “Offering staff the opportunity to follow up on a more personal basis in a one-to-one meeting, or even to watch a webcast in private, is another way to keep discussion going.”

There are plenty of resources, many of them free, to help staff who need advice on making their money go further. Apps such as Nous help manage bills and find the best deals for employees, whereas budgeting apps such as Goodbudget and Spending Tracker help keep tabs on your outgoings.

Chartered accountants’ wellbeing charity caba has launched a new financial health podcast series aimed at young accountants looking to get on top of their personal finances as part of a wider financial health campaign. The podcast series will be hosted by social media star Gabriel Nussbaum (aka That Money Guy).

Enhance emotional support

Money worries can have a huge impact on mental wellbeing, and can be both the cause and effect of mental health issues. “Where signs of emotional difficulty are identified, employers should signpost individuals towards the relevant emotional wellbeing support available to them. This may include cognitive behaviour therapy sessions (CBT) or employee assistance programmes (EAPs), which provide individuals with direct access to specialists,” says Holl. 

Consider alternatives to pay rises

Even if you don’t feel you can increase baseline salaries in line with inflation, there are other ways to improve the overall remuneration package for employees, suggests Samantha O’Sullivan, Policy Lead at the Chartered Institute of Payroll Professionals. That might be paid-for meals at work, access to an employee assistance programme to support employees with stress and debt problems, and access to employee discount schemes. 

“Offering salary sacrifice as an option for cycle to work, pensions and childcare voucher schemes, as long as National Minimum Wage compliance is met, is also something businesses should be considering to help employees through financial hardship. This could also save the employer some money on national insurance contributions.” 

Highlight relevant, existing benefits

Amplifying communication of existing benefits may help employees to cut costs. If your company provides options like season ticket loans or interest-free loans, make sure staff are aware of them. Private healthcare, insurance and assistance with lifestyle benefits such as gym memberships and discount codes can also help employees cut costs and boost their physical and mental health during the cost-of-living crisis, Holl says.

Use tax-efficient gifts

The trivial benefits scheme allows an organisation to give its staff a non-cash gift, such as a gift card, of up to £50 with no tax or national insurance to pay. “This is a useful piece of legislation that firms can use to support their staff as costs rise,” says Alasdair McGill, founder of Dundee-based accountancy firm Ashton McGill and Entrepreneur in Residence at the University of Dundee.

The firm has given its team Scotland Loves Local gift cards, part of the Scotland Loves Local campaign. The cards can be spent with local businesses on everything from food to fuel, clothes to coffee. There is a £50 limit per gift for each employee and firms can use the trivial benefits scheme more than once a year as long as it doesn’t become a part of the employee’s regular salary or contract. Company directors are limited to £300 per year through the scheme.

Create conditions for flexible, remote working

Businesses can help to reduce the financial pressure on staff by reducing their work-associated outgoings. For example, this might involve allowing employees to work from home so they can lower travel expenditure or by offering flexitime to avoid peak-time travel expenses. In addition to reducing commuting costs, flexibility in working hours and remote working policies can help employees to manage stress and offer support with childcare. 

Offer direct financial help

If there is capacity, set up an emergency fund or grants that employees can apply for if facing financial hardship. Another way could be to provide employees with short-term interest-free loans to cover unexpected costs. 

Be open about remuneration

Managers should have open conversations about employee compensation, even during a financial crisis. Well-communicated pay equity is 13 times more important for engaging and retaining employees than high levels of pay, according to a report by human capital advisory firm The Josh Bersin Company. 

“While pay rises may not be feasible, employees can be made to feel valued through upskilling opportunities and workplace perks that contribute to long-term career growth and wellbeing,” says Rameez Kaleem, founder and managing director at reward consultancy 3R Strategy.

If you’re struggling to make ends meet during the cost-of-living crisis, chartered accountants’ wellbeing charity caba offers a range of free and confidential services to ICAEW members and their families to help ease your money worries.