Charles Courquin, Director at Symatrix, explains how employers can help their staff through the spiralling cost of living crisis.
The rise in inflation, interest rates and national insurance, along with the incoming price cap shift on energy bills is a significant cause of worry for many workers across the UK. That’s not even taking into account the increased costs that commuting motorists have had to pay to fill up at diesel and petrol pumps since last year.
While many people would have anticipated at least some form of tax rise due to the debt accrued over the Covid-19 pandemic, few consumers a year ago could have foreseen the staggering 54% increase on the energy price cap, leading the UK Government to rush to implement the Energy Bill Discount Scheme and Council Tax Rebate to ease worry among under-strain households. It’s a myriad of factors that are making the cost of living crisis a real threat in 2022.
With this in mind, now more than ever, employers need to take responsibility for their staff’s wellbeing and ensure that they are doing all they can to alleviate the pressure on them.
With the current climate making it much more likely for employees to need to pay significant bills at short notice, flexibility in pay is crucial. A key prerequisite is that employees should always be paid on time, giving them the confidence that they will have an assured, seamless payroll experience that will not involve issues, errors or any late payments.
But employers can also take pay further by offering value in flexibility. With nearly two-thirds of workers expecting their overall pay to go up by less than the cost of living, there’s an increasing need to tighten the purse strings. Deployed financial wellbeing offerings within an established, single HR and payroll system can allow employees to instantly access the percentage of wages that they’ve already earned during their pay cycle. This then means that urgent payments can be made when required and doesn’t leave employees worrying about making ends meet in the middle of the month.
Beyond payroll flexibility, there are other financial incentives that employers can offer to help ease the strain on employees, such as cycle to work schemes. With the price of diesel and petrol at the station pumps hitting new record highs in February 2022, commuting motorists are feeling the squeeze.
By purchasing a bike and/or accessories via the scheme from their participating employer, workers can both avoid spiralling fuel costs by leaving the car at home while also having a positive impact on the environment by drastically reducing their CO2 emissions. Most scheme participants are able to save between 32%-42% depending on their current tax band.
Workers also gain financially from the fact that cycle to work schemes operate as a salary sacrifice employee benefit. This essentially means that an employee gives up part of their salary in exchange for the benefit, which is taken from their gross salary before tax. While on the surface this may seem counterproductive in terms of money earned, the employee will then pay less income tax and national insurance, which will go some way to offsetting a portion of the national insurance rise that’s set for 2022.
Such schemes can also be applied to offset other expenses, through payroll, including employer-provided childcare or ultra-low emission vehicles, while employers themselves can also typically save up to 13.8% on funds processed.
Facilitating freedom for employees
In addition to incentives and schemes, simply providing the ability for workers to earn their wages during their preferred working hours allows them to continue to thrive in their role and push for promotion opportunities, and this can typically be offered via flexible working arrangements. Numerous organisations have made a successful and productive switch to either remote or flexible setups during the pandemic, enabling employees to provide value in the way that suits them. This could benefit working parents with childcare commitments for example.
For people up and down the UK, 2022 is set to be a tough year financially, but employers can take a number of steps to ease the financial strain for workers. This will not only leave more money in the pockets of under-pressure employees but will also show a commitment from the employer to the employee in terms of mental health at work and workplace wellbeing.